Arm Holdings shares slide as options draw robust trading volume. On Monday, options on SoftBank’s Arm Holdings, the year’s largest IPO, moved rapidly, with investors bracing for a potential fall.
The shares fell 4.5% to $58.00 after reaching $69 on Friday, their second trading day. Bernstein rated the stock “underperform” initially.
Arm options trading began on Monday with 74,000 contracts traded. Trade Alert’s list of the 50 most actively traded single-stock names on Monday’s options market included Arm.
Facebook, now Meta Platforms, had the most active options market debut in 2012, trading 360,000 contracts on the opening day.
Arm traded 82% of its options in contracts expiring on Oct. 20, mostly puts, which are used to hedge against share price falls.
“The volume is robust,” said Capital Market Laboratories CEO Ophir Gottlieb of Los Angeles.
“The stock fell swiftly… Speculation about further decline is likely due to strong selling pressure “Gottlieb remarked.
Arm puts that protect against shares falling below $50 by mid-October were the most traded Arm options on Monday, with roughly 11,000 contracts traded.
“The trading has been concentrated in the front-month downside puts,” ORATS founder Matt Amberson noted, highlighting ARM’s significant options skew.
“This suggests the puts were on-balance bought,” Amberson said.
Bernstein noted that Arm was “too soon to declare them an AI winner” and would “remain more conservative on their ability to deliver increased royalty rates at the pace management is guiding.”