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Blockchain Stock Pops, Options Traders Pile On

Patrick Martin

Remember bitcoin? Well, it's still around, and found itself in the spotlight on Friday, after Chinese President Xi Jinping reportedly endorsed blockchain technology and called for greater advancement into the field. In fact, searches for "blockchain" on China's Baidu skyrocketed by more than 40 times in just two days, according to The Wall Street Journal. This sent shares of Xunlei Ltd (NASDAQ:XNET) -- which offers blockchain-related services -- up 103.4% on Friday, and up 26.6% today to trade at $6.10. Amidst this breakout, XNET options traders aren't missing out. 

With just under two hours left in trading, more than 19,000 XNET options have crossed the tape so far -- 14 times the average intraday amount, and put volume already topping last Friday's annual high. Specifically, about 11,000 calls and 7,900 puts have changed hands thus far.

Leading the charge is the November 7.50 call, where new positions are being opened. Buyers of the call expect XNET shares to topple $7.50 by the close on Friday, Nov. 15, when front-month options expire. There are also new positions being opened at the November 2.50 put, indicating there's a wide range of opinions regarding the Chinese stock's trajectory over the next few weeks.

In the last 10 days, 5,214 Xunlei calls were bought to open at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to just 672 puts. Meanwhile, last Friday, Oct. 25, XNET saw annual-high call volume of nearly 35,000 contracts, with open interest at the January 2020 7.50-strike call soaring by more than 17,000 contracts over the weekend.

XNET earlier nabbed a fresh annual high of $6.83, and has now more than tripled off its Aug. 5 record low of $1.87. Should today's results hold, the blockchain stock will have conquered its 320-day moving average for just the second time on a closing basis since August 2018.

A word of warning, though. The equity could be due for a breather soon, as its 14-day Relative Strength Index (RSI) was already at an absurd 87 heading into today -- deep into overbought territory.

Daily Stock Chart XNET