Unusual Options Activity Shows 71,000 Calls Hit the Tape for Applied Digital Stock – How You Should Play APLD Here

Core Insights - APLD has experienced significant options activity, with a notable trade of 71,000 contracts for $25 calls, indicating potential bullish sentiment or a delta-neutral strategy [4][5][6] - The stock has seen a dramatic increase of over 200% in the past year, primarily due to its shift towards AI-focused data-center infrastructure [6][15] - APLD's recent financial performance shows an 84% increase in revenue year-over-year, but the company remains unprofitable with a net loss of $27.8 million for fiscal Q1 2026 [15][16] Options Activity - The large block of call options traded on Nov. 14 suggests that traders are positioning for a significant price movement in APLD, with a breakeven point around $26.50, approximately 12% above the stock's closing price [3][7] - Implied volatility for the options is at 114%, while historical volatility is around 97%, indicating elevated but not extreme volatility levels [2][22] - The surge in options volume coincided with a jump in share volume to 44 million, suggesting that traders are reacting to the options activity [8] Financial Performance - APLD reported $64.2 million in revenue for fiscal Q1 2026, marking an 84% increase from the previous year, driven by installation work for new AI clients [15] - Despite revenue growth, the company is still deep in the buildout phase and remains unprofitable, with a focus on transitioning to a recurring-revenue model [16][18] - The stock's valuation reflects high expectations for future growth, with a price-to-sales ratio of approximately 46x compared to a sector average of 3.4x [18] Market Sentiment and Future Outlook - Wall Street analysts remain positive on APLD, with nine out of ten rating it a "buy" and an average price target of around $40 per share, indicating potential upside from current levels [19] - The stock has pulled back roughly 36% from its October highs, creating a scenario where a short-term rebound could be plausible, especially with potential macro catalysts on the horizon [20][21] - The company's strategic pivot towards AI infrastructure and partnerships with major players like Nvidia positions it favorably within the emerging AI ecosystem [14][19]