IREN sees heavy unusual put volume after Bitcoin rally

Iren Ltd. (IREN) recorded heavy, unusual trading in out-of-the-money put options late last week, a development Barchart reports suggests some investors view the Bitcoin mining and data center company as undervalued. The activity occurred after Bitcoin moved higher, a trend that likely drove IREN's recent price gains.

IREN closed Friday at $44.68, a 7.27% increase. The stock had already risen 5.18% on Thursday, Sept. 3, and 7.55% on Wednesday, marking a recovery from a two-month slump. Bitcoin spiked during the week, driven by heavier institutional demand for digital assets following Federal Reserve signals that it would not aggressively hike short-term rates.

The company is shifting its operations toward AI-related data center work rather than solely Bitcoin mining. Last week, IREN secured financing for GPU servers in its data centers totaling $2.4 billion. This follows $6.5 billion in GPU financing over the prior three months, according to its earnings release on Aug. 27. For the quarter ending June 30, 2026, AI cloud services revenue of $70.5 million surpassed Bitcoin mining revenue of $66.7 million, a first for the company. In the previous quarter, Bitcoin mining revenue was $111.2 million compared to $33.2 million for AI cloud services.

Despite this operational pivot, the market continues to treat IREN as a Bitcoin play. Barchart's Unusual Stock Options Activity Report indicates that over 14,000 long-dated IREN put contracts traded on Friday. These contracts expire on March 19, 2027, or 195 days from now, at an out-of-the-money strike price below the trading price. The report implies bullish sentiment from institutional investors shorting these puts.

The 14,000 puts represent more than 81 times the prior number of outstanding put contracts at the $40.00 strike, which sits approximately 10.5% below the $44.68 closing price. Short-sellers received an $8.57 premium per contract, resulting in a short-put yield of over 21% over just over half a year. This equates to an annualized expected return of over 40%. The breakeven point for these investors is $31.43, nearly 30% below Friday's close.

Analysts project a significant revenue spike for IREN. Forecasts indicate revenue will reach $2.82 billion for the year ending June 30, 2027, up from $707 million for the year ended June 30, 2026. For the following year ending June 30, 2028, the forecast is $7.02 billion, suggesting sales are expected to increase tenfold in two years.

Consequently, analysts have set higher price targets for the stock. Yahoo! Finance's average price target is $77.84 per share based on input from 17 analysts, while Barchart's mean survey price target is $76.36. These figures imply a potential rise of over 74% in the coming year.

Mark R. Hake, CFA, disclosed that he did not hold positions in any of the securities mentioned in this article at the time of publication.