Opendoor Technologies has seen an incredible increase in its stock price, jumping nearly 450% in the last month. In just five days, shares have surged about 230%, going from around $1.00 to over $3.00. This recent stock rise is driven by Eric Jackson of EMJ Capital, who publicly supported Opendoor on social media. He highlighted the possibility of Opendoor replicating Carvana’s earlier success, which saw a big rebound in its stock. Opendoor is set to announce positive EBITDA in its upcoming earnings report, thanks to cost-cutting efforts and limited competition in the real estate iBuying space. However, the company does face challenges, particularly its high debt levels. Opendoor’s stock history shows extreme ups and downs, peaking in 2021 and dropping to around $1 by the end of 2022. Although there is a chance for big rewards, it’s crucial to approach these speculative stocks with caution due to their risks and lack of stable earnings. The stock’s recent rise has led to incredibly high implied volatility in the options market. Data indicates that implied volatility for short-term options is over 200%, making both calls and puts quite costly. This suggests that the market is expecting big price swings, which makes buying options a risky investment. For traders who align with Jackson’s optimistic view, considering call options can be a way to bet on further gains, but the high prices are a concern. There’s also notable short interest in the stock, reported at over 20%, which could fuel a continued squeeze. This setup makes long call options appealing, but they are pricey, meaning the stock must rise significantly just to break even. It’s also important to note the fundamental challenges, such as the company’s high debt exceeding $4 billion. The overall housing market is tough too, with the National Association of Realtors reporting a 3.3% drop in existing-home sales in June. These risks could make purchasing put options a smart strategy for those who think the rally might not last. With premiums on both sides being steep, selling options appears to be a strong, though high-risk, opportunity. Strategies like selling cash-secured puts or covered calls allow traders to collect good premiums amid market fear and uncertainty. The main risk is being assigned the stock if it moves sharply against the position before the next big event. We recall the stock reaching above $30 in 2021, only to crash, showing its historical boom-and-bust pattern. The next big moment will be the Q2 earnings report expected around August 3rd, which will either confirm the recent excitement or cause the stock to fall. Traders should also be ready for a significant drop in option prices after the announcement, known as an “IV crush,” as uncertainty decreases.

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