Unusual Put Options Volume in IREN after Bitcoin Rises Last Week

Iren Ltd. (IREN), a Bitcoin mining and data center company, has seen a significant increase in unusual put options volume in recent days. According to a Barchart report, the company experienced a huge surge in out-of-the-money put options trading last week, following a rise in Bitcoin's price. This unusual activity suggests that some investors believe IREN is undervalued and is poised for a major rebound.

Context and Background

IREN has been transitioning from a Bitcoin mining-focused company to a data center company with a focus on AI-related work. The company received financing last week for GPU servers in its data centers for $2.4 billion, which underscores its pivot to AI cloud work. This move is part of a larger trend in the industry, as companies seek to diversify their revenue streams and capitalize on the growing demand for AI and cloud services.

IREN's recent earnings release showed that Bitcoin mining revenue was lower than AI cloud services revenue for the first time. This shift in revenue streams has led some investors to reevaluate their views on the company's stock. Despite the company's pivot, the market still sees IREN stock as a Bitcoin play and reacts to Bitcoin's moves.

Unusual Put Options Activity

According to Barchart's Unusual Stock Options Activity Report, over 14,000 long-dated IREN put contracts (expiring March 19, 2027, or 195 days from now) traded on Friday at an out-of-the-money strike price. This represents over 81 times the prior number of outstanding put contracts at $40.00, which is just about 10.5% below the closing price of $44.68. The short-sellers received an $8.57 premium, so their short-put yield is over 21% (i.e., $8.57/$40.00 = 21.45%) over just over half a year (i.e., 0.53 yrs). This implies the investor has achieved an annualized expected return (ER), assuming the same returns can be repeated, of over 40%: 21.45% / 0.53 yrs = 40.47% annualized ER

The investors shorting these puts have a very low breakeven point ($40-$8.57 = $31.43) that is almost 30% below Friday's close. This suggests that the investors are confident in their view that IREN stock will rebound significantly in the coming months.

Analysts' Forecasts and Price Targets

Analysts are forecasting that revenue will spike this year, ending June 30, 2027, to $2.82 billion, up from $707 million for the year just ended on June 30, 2026. For the following year ending June 30, 2028, the forecast is $7.02 billion. This represents a significant increase in sales, with a 10x spike expected in the next 2 years.

As a result, analysts have significantly higher price targets (PT) for IREN stock. Yahoo! Finance's average PT is $77.84 per share from 17 analysts, and Barchart's mean survey PT is $76.36. This suggests that analysts see IREN stock rising by over +74% in the coming year.

Conclusion and What to Watch Next

The unusual put options volume in IREN suggests that some investors believe the company is undervalued and is poised for a major rebound. The company's pivot to AI-related work and the growing demand for AI and cloud services make it an attractive investment opportunity. Analysts' forecasts and price targets also suggest that IREN stock is likely to rise significantly in the coming months.

Investors should keep a close eye on IREN's stock price and any further developments in the company's pivot to AI-related work. The company's revenue growth and potential for a major rebound make it an attractive investment opportunity for those looking to capitalize on the growing demand for AI and cloud services.