Cloudflare Options Activity Shows Bullish Conviction as Stock Rallies Over 9%

A significant surge in Cloudflare Inc. (NET) shares on Wednesday, which saw the stock climb 9.25% to $310.59, was met with a wave of bullish activity in the options market. Data from the trading session indicated that investors are positioning for continued upward momentum rather than hedging against a potential peak.

Aggressive Call Buying Signals Upside Bets

Options volume for Cloudflare was unusually high, with traders favoring calls over puts by a ratio of approximately 2.3-to-1. According to market data, 17,150 call contracts traded hands compared to just 7,415 put contracts.

This activity was concentrated in out-of-the-money call options with a near-term expiration, suggesting a high degree of conviction. The most active contracts were:

• $350 strike calls for the September 18, 2026, expiry, which saw volume of 2,473 contracts against a prior open interest of just 776. This indicates that most of the activity represented fresh bullish positions.
• $360 strike calls for the same expiry, with 1,445 contracts traded, adding to an existing open interest of 1,762.

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For these trades to be profitable, the buyers need Cloudflare's stock to rally another 13% to 16% before the contracts expire in just nine calendar days.

Market Signals and Hedging Activity

Beyond individual call buying, traders also utilized structured products like bull call spreads. A spread targeting a move to $330 by September 18 was also active, offering a more conservative but directionally aligned bullish bet. The rising price of the stock was accompanied by an increase in its 3-month implied volatility, signaling that the market is pricing in the potential for continued large price swings.

While the sentiment was overwhelmingly bullish, some notable hedging was also observed. A fresh put spread expiring in two days was opened, with 1,305 contracts traded to protect against a sudden reversal of Wednesday's gains. This activity, though smaller in scale, shows that some market participants are taking measures to protect against short-term downside risk following the sharp rally.