Ambarella Options Volume Spikes Amid Conflicting Directional Bets

Options trading in Ambarella Inc. (AMBA) surged on Friday, revealing a deeply divided sentiment among traders who are positioning for a significant price move but disagree on the direction.

Trading Volumes Show a Split

According to options market data from September 4, total volume reached 19,463 contracts, a notable increase in activity. The flow was nearly balanced, with 9,939 calls trading against 9,524 puts, resulting in a call/put volume ratio of just 1.04.

This near-parity suggests a lack of strong directional conviction in the market. While there is a slight lean toward bullish call options, the volume is not substantial enough to indicate a clear consensus for an upward move in the stock, which was trading around $63.55.

Upside Calls See Fresh Interest

The most significant activity occurred in short-term upside calls, pointing to pockets of bullish speculation. The most active contracts were:

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• The $65 strike calls expiring September 18, which traded 2,135 contracts against a prior open interest of only 68.
• The $67 strike calls for the same expiration, which saw 1,626 contracts change hands compared to just 62 in open interest.

This high volume relative to existing positions indicates that traders were establishing substantial new bets on the stock rising above these levels before expiration. However, without execution price data, it is not possible to definitively determine if these options were bought to open bullish positions or sold to express a more neutral or bearish view.

Elevated Volatility Signals Uncertainty

Despite the bullish call activity, significant volume in put options and a high level of implied volatility underscore the market's uncertainty. The $55 and $60 puts were also active, though their large existing open interest suggests this could be related to hedging or closing prior trades rather than new bearish bets.

Meanwhile, 3-month implied volatility, a measure of expected price swings, stood at an elevated 62.25%. Although this figure represents a decline from previous levels, it remains high, indicating that the options market is still pricing in the potential for a substantial move in Ambarella's share price in either direction.