CoreWeave Rules the Unusual Options Activity. But Should It Be in Your Portfolio?

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8 hours ago

Friday looks to be a volatile day in the markets after Donald Trump rattled his tariff saber on Thursday.
The president threatened Canada with 35% tariffs on imports into the U.S. and blanket tariffs of 15%-20% on those countries that have yet to receive a letter from the White House with a specified rate.
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It continues to amaze me how little regard investors are paying to tariffs at the moment. It's as if the early April swan dive — from April 2's close to the April 8th close (4 trading days), the S&P 500 lost 12% — was decades ago.
I'm not a technical analyst, so I'm not going to spend any more time questioning the sanity of investors. Still, I have to say, the mere fact that CoreWeave (CRWV) had 10 of the top 20 unusually active options--defined as Volume-to-Open-Interest ratios of 1.24 or higher and expiring in seven days or longer--speaks volumes about where investors' heads are at.
The AI-focused company may be ideally situated for the boom in artificial intelligence, so I get the heightened options volume--711,765 on Thursday, about 75% higher than the 30-day average--I'm not sure the average retail investor should be buying CRWV for the long haul.
Have an excellent weekend.
As the S&P 500 P/E multiple moves higher in 2025, it gets closer to hitting a 10-year high. Right now, it's around 30x, the same level as March 2021, down from the 10-year high of 38.20x in December 2020.
Source: Macrotrends.net
While I understand that investors are willing to pay more for AI-related businesses, it seems that they're eager to do so for almost every company in every industry. How long can this carry on? That is the million-dollar question.
At present, CoreWeave loses an exceptional amount of money, so I'll focus on its EV/TTM revenue multiple instead. It's currently 28.9x, up from 14.7x when it went public at $40 in March. It's up 246% in the three months since its IPO.
CoreWeave generates over 70% of its revenue from Microsoft (MSFT). The tech giant's enterprise value of $3.75 trillion is 13.9x its trailing 12-month revenue. Back in March, it was 10.8x, much cheaper than CoreWeave.
Which begs the question? Why not buy MSFT stock for the long term, significantly reducing your risk exposure, while likely delivering above-average returns over the long haul?
In Microsoft's Q3 2025 quarter, its operating income was $32.o billion. CoreWeave's operating loss was $ 27.0 million, according to S&P Global Market Intelligence. In 2024, CoreWeave's net loss was $937.8 million, up from $593.7 million a year earlier. Its adjusted net loss was a more palatable $64.9 million, with an adjusted operating profit of $355.8 million, up substantially from $703,000 in 2023.
You could make the case that the adjusted numbers show that it can make money on a non-GAAP basis, which suggests its P/E multiple isn't as outrageous as it might seem.
However, the net debt should be something to watch closely.
At the end of December, it was $10.62 billion, or 16% of its $67.49 billion market cap. That would be a reasonable percentage for a typical industrial business, but for a tech company? Microsoft's net debt of $25.4 billion is 0.7% of its $3.73 trillion market cap.
Again, why not invest in MSFT stock and call it a day?
One more thing.
In the 12 months ended March 31, the company's interest expense was $584.0 million. That's $4.64 of sales for every $1 in interest. At the end of December, it was $5.31 in sales for every $1 in interest.
I doubt that's sustainable. I guess we'll find out soon enough.
When you examine the company's financials, it's easy to see why options are popular for CoreWeave stock. It's a lower-risk way to play the fast-growing business without losing your shirt.
As mentioned, there were 10 unusually active options in the top 20 yesterday (see below).
Not surprisingly, they're all calls. CoreWeave's P/C (Put/Call) volume ratio yesterday was 0.26, which means there were 3.85 calls for every put. That's very bullish. Meanwhile, the P/C OI ratio was 1.46, which means there are 1.46 puts open for every call, a bearish long-term indicator.
Now, there are plenty of esoteric options strategies you could play here, but I'm going to assume you're relatively risk-neutral and do like the long-term potential of its stock.
With that being the case, I'd probably go with the Jan. 16/2026 $100 call with an ask price of $40.15, or 29% of its share price. With a DTE (days to expiration) of 191, it gives you a decent amount of time for the shares to appreciate further.
About 28% ITM (in the money) and a breakeven of $140.15, if you believe it will move higher over the next 191 days, your profit probability is high.
If you're a little more adventurous, you could sell a Jan. 16/2026 $100 put for an annual return of $43.9%. Of course, if the share price falls below $100, you could be asked to buy the shares at expiration at $100, above where the shares trade for a paper loss.
CoreWeave is a stock that I would neither own nor use options for, but that doesn't mean you shouldn't.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com