Super Micro Computer’s options activity implies more big moves for the stock in the days and weeks ahead.
Options markets now imply shares will move about 14% up or down as of Tuesday. The absolute average weekly gain of the stock in the past 104 weeks was 9.4%, and 13% over the past 13 weeks, according to Dow Jones Market Data.
Super Micro stock has been the talk of the town since the summer. Investors have been working through seemingly endless streams of news about the server company since it reported earnings in August. This included disappointing profit margins, a short-seller report, delayed financial filings, the risk of delisting, and the resignation of its auditor. That news has seen the stock go from a popular artificial intelligence play to a highly volatile speculative bet.
Volatile stocks often attract retail investors looking to make money on the price swings. For many, there’s no better way to speculate than with options, which don’t require large amounts of money to make big bets, even if the entire bet could be lost if the stock doesn’t move as expected by the expiration date. In the case of Super Micro, traders are buying calls and selling puts as a cheap way to bet that the stock rises more.
The stock reached its 2024 closing high on March 13 when it was up 318% for the year. Shares have since tumbled about 77% and are up 0.2% for the year. Options traders are betting on a comeback.
And there has been a comeback this week. Shares of Super Micro rose 31% on Tuesday to $28.27 after the company said in a statement on Monday that it had hired a new auditor and submitted a plan to the Nasdaq for a time extension to regain compliance with the stock market’s listing requirements. That follows a 16% rise on Monday.
Even though options traders are betting on big gains, nothing is certain. Super Micro’s new auditor needs to review the company’s financials, and more problems may be found that could delay filing financial results even further—and prevent Super Micro from meeting its deadline with the Nasdaq.
Only one thing is certain. The volatility should continue.
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