Hey Traders,

Cathie Woods’ ARK Innovation ETF (Ticker: ARKK) is no stranger to the media spotlight.

A quick Google search will yield thousands of recent results … and many of them don’t exactly paint the ETF in the most flattering light.

Nevertheless … ARKK persists, and Woods continues to actively manage the ETFs holdings, hoping for a return to ARKK’s 2020 glory, where the ETF handily outperformed the broader market, returning a whopping 156.6%.

So where is ARKK looking for its next big hit?

Here’s the three largest trades the ETF made last week.

Coinbase (Ticker: COIN):

Since it’s IPO in April 2021, COIN has been the subject of plenty of speculation. The first publicly traded crypto-specific exchange soared in the hours immediately following its debut, but the shares quickly returned to earth. Currently, COIN sits around $230 – slightly off its $250 IPO price.

COIN makes up ARKK’s fifth largest holding, with 5.6% of the ARKK portfolio dedicated to COIN shares, and with ARKK now holding 1.64% of all COIN shares.

Perhaps it is COIN’s low price that inspired the innovation ETF to add to its position?

Last Monday (January 10), ARKK purchased an additional 86,295 shares of COIN, on a day where the cryptocurrency exchange stock was trading around $225.

However, it should be noted that during December, ARKK sold 281,402 COIN shares, so this latest addition may be re-building their previous position, while lowering their cost basis (which is currently $285.12).

What are the pits saying?

Currently, open interest is slightly higher than average, at 105% of its typical amounts. While calls outnumber puts 1.2-to-1, put open interest is higher than normal, at 110% of its typical amounts. 30-day historic volatility (HV) sits nearly even with 30-day implied volatility (IV), suggesting that options seem to be fairly priced, considering the amount of movement COIN typically sees.

The most popular contracts are the front-month puts, with the 165-strike and 220-strike seeing the highest concentration of open interest of any other COIN contracts. 

Rounding out the top five are the front-month 300-strike, 400-strike, and 250-strike calls.

Zoom (Ticker: ZM):

Another name catching ARKK’s eye is video communication stock ZM.

After hitting an October 2020 high, ZM has slowly given away many of its pandemic-induced gains, though still sitting above its pre-pandemic levels at $159.72.

Last Thursday, ARKK added an additional 174,640 shares to its ZM holdings, which now accounts for 6.4% of ARKK’s portfolio – it’s second largest holding behind Tesla (Ticker: TSLA). ARKK’s holdings account for 2.2% of ZM’s shares.

Again, it seems as though ARKK could be trying to lower its cost basis, as its average purchase price for ZM is a whopping $324.65 – ouch!

In the pits, call buyers seem to be piling on more than usual, with call open interest at 112% of its typical levels, and calls outnumbering puts 1.1-to-1. Specifically, traders are targeting the February 180-strike calls and March 170-strike calls.

Traders aren’t exactly getting a whole lot of bang for their buck, with ZM’s 30-day IV sitting above its 30-day HV, indicating the pits are pricing in more movement than ZM has been seeing as of late.

Roku (Ticker: ROKU):

ROKU was another ARKK target last week, and is yet another tech stock down from its 2020/2021 highs:

The shares closed on Friday at $167.48, their lowest close since September 2020.

However, ARKK once again seemed to be bargain shopping, snapping up 163,353 shares of ROKU stock during Thursday’s trading session at a much lower cost than the $263.46 per share that ARKK has averaged so far.

ROKU is ARKK’s fourth largest holdings, with ROKU accounting for 5.9% of ARKK’s holdings, and with ARKK holding nearly 4% of ROKU shares. 

ARKK isn’t the only one paying some extra attention to ROKU …

In the pits, ROKU’s open interest is at 113% of its typical levels, and much of this interest is call-skewed, with call open interest at 118% of its normal amounts, and with calls outnumbering puts 1.2-to-1.

However, two of the top three open interest contracts are puts. It seems traders have piled into the front-month 160-strike put, as well as the February 180-strike put. However, the February 180-strike calls are not far behind.

Currently, options traders are getting a bargain on their ROKU trades, with ROKU’s 30-day HV sitting well above its 30-day IV, indicating options traders are getting more movement than they are paying for.