Circle (CRCL) saw a recent pullback from its frothy post IPO highs that peaked right near 300 on 6/23 and now retesting its AVWAP from its IPO day and that support comes in at 180. The stock formed a bullish hammer candle Tuesday right where it should have and saw several bullish longer dated option flow trades show up both Monday and Tuesday. Early in the morning CRCL saw 750 Jan. 2027 $225/$325 call spreads bought while later in the day before the close it saw a large bull stock replacement sell to open 650 January $160 puts at $41.30, collecting $2.6M and willing to be long stock about 20 points below Tuesdays low. The stock also saw 200 October $135 puts sold to open on Monday for $21 and already seeing those short puts working well with IV30 seeing a sharp 6% contraction in volatility Tuesday.

The stock has had wildly high option premiums since options were listed recently and a trade like the Oct $135 short puts make a lot of sense from a cash secured standpoint if a trader has the capital and is willing to own the stock for the investment story, selling the puts allows for a cost basis near $115 with a stock trading near $190. If you are assigned stock at that point then an option would be to wheel into a covered call and sell something like a 20 delta call which would result in a solid profit if called away later in the year. Using bull put spreads also creates a nice risk defined strategy to use in smaller accounts.

Circle is a global fintech company best known as the issuer of the stablecoin USDC. Its business model is centered around two primary revenue streams: Interest Income from USDC Reserves and Financial Infrastructure & API Services. In essence, Circle makes most of its money from the yield on USDC reserves but is rapidly expanding into software and infrastructure services for digital finance, aiming to become a foundational platform for the tokenized economy.

Citigroup initiated with a Buy and $243 price target this week citing Stablecoins offer incremental speed, cost, and transparency improvements for many payment types, but their “key technology advantage lies in their programmability,” which the firm believes can introduce new payments use cases. Circle’s key competitive strength is its neutrality. Citi is positive on Circle’s opportunity to be a leading enabler of stablecoin adoption.