Through stock options, these large investors figured they could take advantage of the inherent leverage in these contracts in order to express a view on a stock without many finding out. However, there are no benefits without offsetting costs, and the cost of options is that they have an expiration date, which raises the stakes on these leveraged bets.
Most retail investors in the market may have missed an unusual number of call options for buying shares of Reddit Inc. (NYSE: RDDT), as is probably intended by the large traders taking on this positioning. Now that the footprint has been identified, investors need to justify this decision quickly to capture a share of the upside potential before these options expire and the stock takes off.
