Virgin Galactic Options Traders See The Stock Crashing Further

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Last week, Virgin Galactic Holdings, Inc’s (NYSE: SPCE) stock reached toward the stars in anticipation of Sir Richard Branson riding aboard Unity 22 to the edge of the atmosphere. The hype over the successful test flight quickly diminished on Monday after the space tourism company used its elevated stock price to file a $500 million shelf offering of common stock.

The news of the offering also caused the retail trading and WallStreetBets community to lose interest in Virgin Galactic in favor of SPDR S&P 500 ETF Trust (NYSE: SPY), along with Nokia Oyj (NYSE: NOK) and Clover Health Investments Corp (NASDAQ: CLOV). On Wednesday Virgin Galactic was trading down over 11% at one point, on large bearish volume, but bounced off a support level $32.82.

Options traders aren’t big on the stock anymore either and on Wednesday purchased over $1.28 million worth of bearish put contracts of Virgin Galactic. One options trader chose put contracts with a $25 strike price indicating they believe Virgin Galactic could plummet another 23%.

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The Virgin Galactic Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

  • At 11:29 a.m., a trader executed a put sweep near the ask of 228 Virgin Galactic options with a strike price of $33 expiring on July 30. The trade represented a $55,860 bearish bet for which the trader paid $2.45 per option contract.
  • At 11:36 a.m., a trader executed a put sweep near the ask of 517 Virgin Galactic options with a strike price of $30 expiring on July 30. The trade represented a $63,074 bearish bet for which the trader paid $1.22 per option contract.
  • At 11:52 a.m., a trader executed a put sweep above ask of 209 Virgin Galactic options with a strike price of $30 expiring on Aug. 20. The trade represented a $55,860 bearish bet for which the trader paid $2.89 per option contract.
  • At 12:00 p.m., a trader executed a put sweep at the ask of 334 Virgin Galactic options with a strike price of $34 expiring on July 16. The trade represented a $43,086 bearish bet for which the trader paid $1.29 per option contract.
  • At 12:58 p.m., a trader executed a put sweep above ask of 454 Virgin Galactic options with a strike price of $31 expiring on July 16. The trade represented a $30,872 bearish bet for which the trader paid 68 cents per option contract.
  • At 12:59 p.m., a trader executed a put sweep near the ask of 1064 Virgin Galactic options with a strike price of $31 expiring on July 16. The trade represented a $76,608 bearish bet for which the trader paid 72 cents per option contract.
  • At 1:01 p.m., a trader executed a put sweep at the ask of 328 Virgin Galactic options with a strike price of $25 expiring on Aug. 20. The trade represented a $46,248 bearish bet for which the trader paid $1.41 per option contract.
  • At 1:06 p.m., a trader executed a put sweep near the ask of 288 Virgin Galactic options with a strike price of $36 expiring on July 16. The trade represented a $100,800 bearish bet for which the trader paid $3.50 per option contract.
  • At 1:07 p.m., a trader executed a put sweep above ask of 501 Virgin Galactic options with a strike price of $39 expiring on July 16. The trade represented a $306,111 bearish bet for which the trader paid $6.11 per option contract.
  • At 1:07 p.m., a trader executed a put sweep near the ask of 758 Virgin Galactic options with a strike price of $39 expiring on July 16. The trade represented a $464,654 bearish bet for which the trader paid $6.13 per option contract.
  • At 1:14 p.m., a trader executed a put sweep near the ask of 277 Virgin Galactic options with a strike price of $33 expiring on July 16. The trade represented a $45,705 bearish bet for which the trader paid $1.65 per option contract.

SPCE Price Action: Shares of Virgin Galactic closed down 12.4% at $33.07.

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