From a scientific standpoint, it’s difficult to ignore the potential of proteomics specialist Quantum-Si (QSI). Representing the large-scale study of proteins, proteomics focuses on the identification, analysis and characterization of proteins in a cell, tissue or organism. Given the discipline’s potential to spark a wave of innovative health solutions, QSI stock has always attracted speculative interest.
Primarily, proteomics may help identify biomarkers for diseases such as various cancers or Alzheimer's, thus facilitating potential drug targets. Further, this mechanism may usher in a new wave of personalized medicine, allowing for tailored treatments based on patient’s unique protein profiles. Broadly, proteomics may afford greater insight into how cells and organisms function at the molecular level.
Thanks to the stratospheric potential, it wasn’t surprising to see that investor Cathie Wood through her Ark Genomic Revolution ETF (ARKG) become a persistent buyer of QSI stock. Unfortunately, the security has been wildly volatile, with analysts questioning the financial viability of the underlying business. Being that meaningful profitability could be years away, many investors have lost heart.
Most notably, this lack of belief has come from Wood herself. Throughout last year, Wood has trimmed her position in QSI stock. She still owns a considerable amount of the equity. However, she doesn’t appear to be as bullish as before — otherwise, you’d imagine an acquisitive profile.
Amid this backdrop, prospective investors have a difficult choice to make. On paper, QSI stock seems intriguing from a speculative standpoint. On Friday, it lost 11.81% of value. It’s also down heavily from its Jan. 3 closing price of $4.29.
With the severe haircut, should investors buy QSI? It’s complicated.
Unusual Options for QSI Stock Highlights Brewing Anxieties
Generally, investors may view unusual options volume as a positive sign, indicating greater participation from the smart money. However, in some cases, the lack of activity can also trigger attention for less-than-desirable reasons.
On Friday, total options volume for QSI stock reached 16,513 contracts against an open interest reading of 169,185 contracts. Compared to the trailing one-month average metric, the latest tally fell a staggering 41.19%. The one apparent positive was that call volume greatly outnumbered put volume, 12,175 contracts to 4,338.
However, even with this statistic, investors must exercise caution. According to options flow data — which focuses exclusively on big block transactions likely placed by institutional investors — net trade sentiment slipped to $40,500 below parity, thus favoring the bears. Stated differently, those calls represented short transactions, indicating a lack of belief in forward progress.
To be completely transparent, many if not most of these short calls expired last Friday. Therefore, it’s conceivable that QSI stock could pop higher during this holiday-shortened week.
Indeed, a powerful lift over the next four days would align with statistical trends. Under “stochastic” conditions — that is, viewing QSI stock’s performance temporally and without consideration of any other context — Quantum-Si carries a negative bias. However, when viewed dynamically (based on certain conditions), market behaviors shift.
For QSI stock, a weekly loss of up to 5% usually leads to a negative return four weeks later, with a bullish success ratio of only 34.88%. Therefore, if one were to wager on QSI given that it lost 4.1% last week, a bearish options strategy for the derivatives chain expiring Feb. 14 may be enticing.
However, under the aforementioned condition, in the next subsequent week, there’s a 57.14% chance that QSI stock will swing higher. Further, the median positive return clocks in at 4.88%. So, for the ultimate (agnostic) speculator, there’s a double opportunity at hand.
The Revolving Doors of Quantum-Si Strategies
Given the propensity of QSI stock to pop higher following modest volatility in the prior week, aggressive traders may consider the 1.50/2.50 bull call spread for the options chain expiring this Friday (Jan. 24). Presently, the pricing structure gives this strategy a breakeven price of $2.15. The other available call spreads are interesting but are arguably too risky.
However, from the intelligence gathered earlier, we know that in subsequent weeks, QSI stock has a higher chance of faltering. By the options chain expiring Feb. 14, there’s a higher-than-coin-toss odds that QSI will decline. If so, the median loss has historically been 9.88% below the anchor price (i.e. last Friday’s close).
In other words, QSI stock could fall to $2.02 by the close of Feb. 14. If so, agnostic speculators may consider switching sides. If a compelling bear put spread does not materialize for the aforementioned expiration date, one might consider a bear call spread, specifically the 1.50/4.00 spread.
