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Options Trader Makes Aggressive Bullish Play On Cloudera Rebound

Wayne Duggan

Cloudera Inc (NYSE: CLDR) shares were down another 1.49% at the close Friday following the company’s disastrous earnings report last week, but a series of unusually large options trades Friday morning suggests at least one trader thinks the bottom may be near.

The Trades

On Friday morning around 9:22 a.m., Benzinga Pro subscribers were alerted to a purchase of 1,602 Cloudera call options at an $6 strike price that expire Aug. 2. The calls were purchased at the ask price of 29.6 cents and represent a $47,419 bullish bet that Cloudera shares will trade above $6.29 in less than two months' time.

Within 1 minute, likely the same trader purchased an additional 1,820 of the same call options near the ask price at 25 cents. This second trade represented a $45,500 bullish bet on Cloudera.

Just a couple seconds later, likely the same trader purchased 2,976 of those same Cloudera call options expiring on Aug. 2 at the ask price of 30 cents. This time, the bullish bet was worth $89,280.

Altogether, the trader bought $182,199 worth of Cloudera call options at or near the ask price within a 2-minute stretch.

Options Insight

Even traders who focus exclusively on the stock market watch the options market closely to gain insight into what option traders may be thinking.

Due to the relative complexity of the options market, options traders are generally seen as more sophisticated than the typical stock trader. Large options traders are often institutions or wealthy individuals that may have a unique perspective and/or advance information on a given stock.

Earnings Sell-Off Overdone?

The bullish option trading in Cloudera on Friday suggests the smart money may believe long-term investors will start swooping in to but the post-earnings dip in Cloudera stock now that they are convinced a near-term bottom is in.

After the initial knee-jerk negative reaction to the earnings report and surprise CEO departure, Cloudera stock has found consistent support at around the $5 level for the past seven trading sessions. Friday’s option buyer may be betting that the unexpected executive departure doesn’t change the longer-term bullish outlook for the company.

Unfortunately, there’s no way to be 100% certain whether the buys are a standalone position or a hedge against a larger stock holding. Given the combined value of Friday’s trades is under $200,000 in size, they are unlikely to be institutional hedges in this instance.

Cloudera shares were down 1.49% at $5.29 at the close Friday. 

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