Life isn’t fair and that’s especially the case with unusual stock options volume. As kids, we were once told that we’re all special and that our feelings matter. However, some voices are simply more important than others — especially if those voices are backed by big dollar bills. Since the derivatives space represents the domain of sophisticated market participants, what happens here can often influence what materializes on the Street.

Therefore, understanding the activity and nuances of options traders can provide a leg up on future market developments. Even if you’re not particularly interested in the pips and blips of the derivatives ecosystem, the movement of various transactions — especially options flow or big block transactions likely placed by institutional investors — may provide critical intelligence.

Most recently, the smart money might have tipped its hand regarding homestays and experiences marketplace Airbnb (ABNB).

At first glance, ABNB stock sounds either like a compelling bearish trade or a terrible investment. Amid the latest round of tariffs that President Donald Trump announced, there’s been much fervor about securities that could actually benefit from the high-level action. The thinking is that the underlying protectionist policies should be positive for certain domestic enterprises.

However, ABNB stock would run counter to conventional logic. As a discretionary services provider, Airbnb caters to wants, not needs. Because of this dynamic, the company’s core revenue stream is under threat — consumers can simply choose not to take that vacation (or at least defer such plans).

On paper, then, ABNB stock should be vulnerable to extreme volatility. Nevertheless, unusually optimistic transactions suggest that shares could be surprisingly buoyant.

Options Flow Tips Off Support Line for ABNB Stock

On Friday, ABNB stock represented one of the top names in terms of unusual options activity. Specifically, total options volume hit 48,528 contracts versus an open interest reading of 318,814 contracts. Friday’s volume represented a 67.84% lift over the trailing one-month average metric. Interestingly, though, put volume outpaced call volume, 26,779 contracts to 21,749.

This ratio might not surprise onlookers considering that ABNB stock lost more than 6% of value in the open market. Still, options flow provided a more nuanced take. Yes, there were more puts than calls traded. However, the big dogs were largely the ones selling these puts, resulting in a net trade sentiment of $1.27 million above parity, thus favoring the bulls.

Notably, the largest transaction was for 1,225 contracts sold of the $140 put expiring April 17. Here, the premium received by the put seller was $31.95, meaning that the breakeven threshold for these options sits at $108.05. Since Friday’s close of $106.66 is the lower of the two, the sold puts imply a quick reversal in sentiment. Otherwise, continued volatility would force assignment on these puts.

To be fair, another interpretation exists, and that is that ABNB stock below the aforementioned breakeven price represents a compelling long-term deal. Adding to the enthusiasm, ABNB recently flashed the death cross, which is where the 50-day moving average falls below the 200 DMA. While the pattern name has negative implications, for ABNB, the death cross has acted as a contrarian indicator.

Since 2022, there have been three death crosses (not including the most recent example). One month following the flashing of the signal, ABNB has swung higher each time. Of course, there’s no guarantee that the fourth iteration will see the same result. However, the options flow activity suggests that a gradual recovery may take place for the stock.

An Aggressive Strategy for the Risk-Taker

For those who want to grab the highest reward possible that’s still within the realm of rationality, the 110/115 bull call spread expiring May 16 would probably be the most ambitious. This transaction assumes a positive outcome from Friday’s flashing of the death cross. The trade will also require ABNB stock to rise 4.54% to reach the short strike price at expiration.

According to Barchart’s profit-and-loss statement for the proposed transaction, the maximum payout of nearly 113% is quite large due to the probability of profit being only 40.2%. In my opinion, though, I believe the probability is higher based off the anticipated response to the death cross.

With the smart money effectively putting a floor at $108, I would wager that Airbnb is poised for a northward trek over the next four to five weeks. If so, the 110/115 call spread would be extremely tempting.