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Tackle Today: COIN Options Listed

May 4, 2021

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Impressions from freshly listed options

Traders,

Sometimes it takes weeks for a newly minted company to get listed options contracts for traders to play with. For popular stocks, the Street tends to fast track their debut. Such was the case with Coinbase. Its IPO arrived on April 14th. Five trading sessions later, on April 20th, options officially arrived. I snagged a picture of the options chain a few hours into the trading day and have included it below.

Here are my initial impressions.

The volume pushed into the hundreds across various strikes, which provides a good showing for the first session. You’ll note the open interest hasn’t yet registered anything because it doesn’t update until the next day.

As a result of the activity, the bid-ask spreads are much tighter than I would have expected for a new issue. Take the May $320 call, for instance. It traded at 24.30 x 25. Some of the other strikes carry bid-ask differentials of around $1.00. That’s pretty good liquidity for both a high-priced and newly issued product.

A few days after the picture below was taken, COIN Weeklys options started trading, multiplying the number of choices available for traders.

Implied volatility is starting at a high level (around 70%) to reflect the elevated uncertainty that comes with an IPO. It will take weeks for COIN to find its footing and develop a trend. As that happens, implied volatility should start to trend lower.

#TeamTackle


Chart of the Day

Coinbase (COIN) Options Chain

It took five trading days before the options gods finally listed derivatives on Coinbase Global. Now, options traders everywhere can place their bets. If volume patterns a few hours into the trading session are any indication, traders aren’t being shy.


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