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Iren Ltd. (IREN), a Bitcoin mining and data center company, saw huge, unusual volume in out-of-the-money put options late last week after Bitcoin moved higher. A Barchart report shows this and suggests that some think IREN is undervalued.

IREN closed Friday at $44.68, up +7.27%, after rising +5.18% on Thursday, Sept. 3, and +7.55% on Wednesday. It's coming out of a two-month slump, as seen in the Barchart chart below.

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Bitcoin spiked during the week, which is likely why IREN was up so much. Bitcoin moved higher on heavier demand for digital assets from institutions after the Fed signaled it was not going to aggressively hike short-term rates.

Iren Ltd. is transitioning to doing more AI-related data center work instead of Bitcoin mining. It received financing last week for GPU servers in its data centers for $2.4 billion. This that underscored its pivot (see Yahoo! Finance article) to AI cloud work. 

That's also on top of $6.5 billion of GPU financing in the last 3 months, according to its most recent earnings release on Aug. 27.

That release for the quarter ending June 30, 2026, showed that Bitcoin mining was lower than AI cloud services revenue (i.e., $66.7 million vs. $70.5 million). This was the first time this has happened (i.e., Q3 Bitcoin mining revenue was $111.2 million vs. $33.2 million in AI cloud services revenue).

Nevertheless, the market still sees IREN stock as a Bitcoin play and reacts to Bitcoin's moves.

Barchart's Unusual Stock Options Activity Report shows that over 14,000 long-dated IREN put contracts (expiring March 19, 2027, or 195 days from now) traded on Friday at an out-of-the-money strike price (i.e., below the trading price).

This implies bullish sentiment from institutional short-sellers of these IREN puts.

The 14,000 puts represent over 81 times the prior number of outstanding put contracts at $40.00, which is just about 10.5% below the closing price of $44.68.

Moreover, the short-sellers received an $8.57 premium, so their short-put yield is over 21% (i.e., $8.57/$40.00 = 21.45%) over just over half a year (i.e., 0.53 yrs). That implies the investor has achieved an annualized expected return (ER), assuming the same returns can be repeated, of over 40%:

21.45% / 0.53 yrs = 40.47% annualized ER

That is a very attractive ER. On top of that, the investors shorting these puts have a very low breakeven point ($40-$8.57 = $31.43) that is almost 30% below Friday's close.

Analysts are forecasting that revenue will spike this year, ending June 30, 2027, to $2.82 billion, up from $707 million for the year just ended on June 30, 2026.

And for the following year ending June 30, 2028, the forecast is $7.02 billion. In other words, sales are expected to spike 10x in the next 2 years.

As a result, analysts have significantly higher price targets (PT). For example, Yahoo! Finance's average PT is $77.84 per share from 17 analysts, and Barchart's mean survey PT is $76.36.

In other words, they see IREN stock rising by over +74% in the coming year.

It's clear to many investors, including those shorting these out-of-the-money puts, that IREN stock is poised for a major rebound.

On the date of publication, Mark R. Hake, CFA 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