With the cryptocurrency sector continuing to build off its impressive performance this week, it’s only natural that crypto trading platform Coinbase (NASDAQ:COIN) is benefitting. Over the past five sessions, COIN stock secured gains of almost 16%. However, there could be one more profitable opportunity to the upside before the weekend arrives.
First, let’s set up the backdrop. According to CoinMarketCap, the total market capitalization of all cryptos stands at $2.51 trillion. For context, at the beginning of this month, this metric came in at around $2.28 trillion. So, just in the past seven days, we’ve already witnessed a 10% move in the entire sector.
Of course, that’s a major catalyst for COIN stock as the underlying company provides a convenient mechanism for crypto market participation. This framework has a bullish tilt, which should benefit our very short-term trade.
Follow the Data to Coinbase Profits
Since the start of October 2023, Coinbase has seen 108 trading sessions. Within this total, 52 sessions saw their opening price come in lower than the prior day’s close. When that happened, there has been a 57.69% chance that the current session’s closing price will end up higher than the opener.
Compared to the other permutations, the open-down, closing-up pattern saw the most tilted probability. The second-most actionable probability was the open-up, closing-up pattern. This scenario yielded a 51.79% probability that the closing price will end up higher than the opening price.
Given this data, we’re going to attempt to scalp some profits off COIN stock before the weekend.
Trade of the Day: Buy COIN Stock Near-Expiry Call Options
For today’s trade of the day, the idea is extremely specific. If COIN stock opens the session below Wednesday’s close of $238.55, we go in. If not, we don’t. It’s that simple. This way, we’re letting the data dictate our trading, not our emotions.
To execute this trade, we’re going to focus on the 8 March 2024 $240 call. That expires tomorrow so the idea here is to buy at or near the open and sell before Thursday’s closing bell. Yesterday, the contract closed with a premium of $8.90. Using Barchart’s options calculator, if COIN stock reaches $240.94 or 1% up, the $240 call should command a premium of $10.13.
That comes out to almost a 14% profit. However, if COIN stock loses 1% in the open market, the contract could drop to $7.76 or a nearly 13% loss. This is your risk-reward profile.
As a closing note, this option will expire at end of business Friday. Unless you envision a stratospheric run in COIN stock on that day, holding this option into March 8 will likely result in serious time decay. So, it’s a quick in, quick out trade.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
