Options Trade of the Day: RIOT Blockchain $35 call for October 15

Our options trade of the day has been working out quite nicely since we kick-started it only this week. Already we have called for AMC to pop with "Bond, James Bond" hitting screens on Friday, and we got a 20% pop in our call option on Thursday. Today, we move to the crypto space, which should see a pop based on the price of Bitcoin once again being back above $55,000 and holding there. Bitcoin has been strong of late since the Fed played down any fears over banning it. 

RIOT stock news

The latest news flow has been positive for RIOT, and this added to Bitcoin's price rise supporting the share price.  In September 2021 RIOT Blockchain produced 406 BTC compared to 91 BTC in the same month a year earlier. As of September 30, 2021, RIOT said it holds approximately 3,534 BTC, all of which are from its own mining operations. The company currently has 25,646 miners with a hash rate capacity of 2.6 exahash per second. RIOT aims to increase this to 7.7 exahash per second by Q4 2022. This would be a strong growth rate and a strong outlook if the targets are achieved. With 3,534 Bitcoin, at current prices that equates to nearly $184 million worth of Bitcoin. 

RIOT stock forecast

This morning (here) we said we were looking for a breakout due to a number of factors but notably the crossover in MACD. "This one is starting to look more and more interesting to us from the long side despite the downward trend evident on the chart since August. For starters, the Moving Average Convergence Divergence (MACD) has bottomed out and is crossing into a bullish signal. The Relative Strength Index (RSI) also looks to have bottomed out. As mentioned, the sector was strong on Thursday, but RIOT stock lagged a bit and Bitcoin has powered ahead and looks to remain bullish with consolidation above $50,000. We need confirmation though before going long. A strong move with confirmation from the RSI breaking the down trend line would do the trick.

Looking at the daily chart below we can see the shrinking range and resulting small-bodied candles. At some stage a breakout will occur and nothing better than a surge in Bitcoin to help this along. Buying a $35 call for October 15, one week's time, will cost about $0.10 per contract. We expect the price to pop and volatility to pop, both of which should support the option's price.