SOUN Big Bet on Put Protection - $2.3M Hedging Play!
Institutional whale drops $2.7M on SOUN options (YTD: +8.3%). This call positioning reveals where the smart money expects the stock to move. Full analysis includes gamma-based support/resistance levels, comprehensive catalyst timeline, three risk-adjusted trading strategies, and precise entry/exit p
📅 October 23, 2025 | 🔥 Unusual Activity Detected
🎯 The Quick Take
Someone just dropped $2.3M in premium on SOUN at 11:30:20 AM today in a coordinated multi-leg strategy! The trader sold $884K worth of October 31st calls while simultaneously buying $1.4M in October 24th puts. This sophisticated setup suggests institutional players are locking in gains while protecting against near-term downside. Translation: Smart money is playing defense on this AI stock!
📊 Company Overview
SoundHound AI, Inc. (SOUN) is an independent conversational AI platform developer with:
- Market Cap: $7.43 Billion
- Industry: Prepackaged Software Services
- Employees: 842
- Primary Business: Voice AI technology for retail, financial services, healthcare, automotive, and restaurants through products like Smart Answering, Smart Ordering, and Dynamic Drive-Thru
The company enables businesses across industries to deliver high-quality conversational experiences to customers through their proprietary AI platform.
📊 The Option Flow Breakdown
The Tape (October 23, 2025 @ 11:30:20):
| Time | Symbol | Side | Buy/Sell | Type | Expiration | Premium | Strike | Volume | OI | Size | Spot | Option Price |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 11:30:20 | SOUN | MID | SELL | CALL | 2025-10-31 | $884K | $19.5 | 13K | 1.4K | 12,281 | $18.52 | $0.72 |
| 11:30:20 | SOUN | MID | SELL | CALL | 2025-10-31 | $884K | $19.5 | 25K | 1.4K | 12,281 | $18.52 | $0.72 |
| 11:30:20 | SOUN | ABOVE ASK | BUY | PUT | 2025-10-24 | $1.4M | $19.5 | 13K | 25K | 12,281 | $18.52 | $1.14 |
| 11:30:20 | SOUN | ABOVE ASK | BUY | PUT | 2025-10-24 | $1.4M | $19.5 | 25K | 25K | 12,281 | $18.52 | $1.14 |
Net Position: Spent $1.4M on puts, collected $884K from calls = $516K net debit for downside protection
🤓 What This Actually Means
This is a sophisticated protective collar strategy executed by someone who knows what they're doing! The trader:
- Bought 12,281 puts at $19.5 strike expiring October 24th for $1.14 each ($1.4M total)
- Sold 12,281 calls at $19.5 strike expiring October 31st for $0.72 each ($884K collected)
- Paid aggressively "ABOVE ASK" for the puts - showing urgency to get protection
- Net cost of $0.42 per share for insurance over the next 8 days
Key Insights:
- Protects against drops below $19.5 through October 24th
- Caps upside at $19.5 through October 31st
- Current stock at $18.52 means put protection kicks in if stock rises 5.3% then falls
- Shows conviction that SOUN won't explode above $19.5 in next 8 days
Unusual Score: EXTREME (1,942x average premium size) - This happens maybe twice a month for SOUN!
📈 Technical Setup / Chart Analysis
YTD Performance Chart
SoundHound AI has had a tough 2025 with -8.3% YTD performance, down from a start price of $20.16 to current levels of $18.49. The stock has been incredibly volatile with a maximum drawdown of -65.18% and 105.2% implied volatility.
Key observations:
- Severe volatility: Hit lows around $7.50 in April before recovering
- Recent rally: Strong recovery from summer lows, climbing from $9 to $18+
- October weakness: Recent pullback from highs around $20 to current $18.48
- Volume patterns: Massive volume spikes in August suggesting institutional repositioning
- Current zone: Trading near YTD starting levels, critical support/resistance area
Gamma-Based Support & Resistance Analysis
Current Price: $18.48
The gamma exposure chart reveals critical levels explaining this protective trade:
Resistance Levels (Orange Bars - Call Gamma Above Price):
- $18.5 (Immediate): Tiny resistance just 0.02% away - virtually at this level now
- $19.0: Moderate resistance at 2.7% above, matching the call strike zone
- $19.5: Significant resistance cluster at 5.4% up - exactly where calls were sold!
- $20.0: Major resistance wall at 8.1% above with heavy call gamma
- $20.5-$21.0: Additional resistance layers creating ceiling structure
Support Levels (Blue Bars - Put Gamma Below Price):
- $18.0 (Strongest): Massive support at 2.7% below current price with 31.8M total gamma
- $17.5: Secondary support at 5.4% down
- $17.0: Moderate support floor at 8.1% below
- $16.0: Deep support at 13.5% down
Gamma Analysis:
- Net GEX Bias: Slightly bullish (65.9M call gamma vs 62.7M put gamma)
- Price action zone: Trading between strong $18 support and $19.5 resistance
- Current structure: Stock sitting right at key $18-$18.5 support cluster
- Market maker dynamics: Heavy gamma at $19.5 explains why calls were sold there - natural resistance ceiling
This gamma setup perfectly validates the collar strategy - strong support at $18, hard resistance at $19.5!
🎪 Catalysts
Upcoming Events
Q3 2025 Earnings (Expected Early November)
- SoundHound typically reports in early November based on historical patterns
- Previous quarter showed strong revenue growth in AI segment
- Watch for customer acquisition metrics in automotive and restaurant verticals
- Key metric: Monetization of voice AI platform across new industries
AI Industry Developments
- Growing competition in conversational AI space from larger tech players
- Enterprise adoption acceleration of voice interfaces
- Automotive partnership announcements could move SOUN significantly
- Restaurant industry digital ordering expansion continues
Volatility Catalysts
- Stock shows 105.2% IV - among highest in software sector
- Small-cap AI stocks facing scrutiny on path to profitability
- Market rotation between growth and value creating swings
- Options expiration week (Oct 24th/31st) could increase volatility
Recently Completed
Recent Price Action
- Recovered from April lows around $7.50 to current $18.48 levels
- Strong August rally on increased institutional interest
- Early October pullback from $20 highs creating consolidation
- High volume period in late summer suggesting repositioning
Industry Trends
- Voice AI adoption accelerating across multiple sectors
- SoundHound competing against larger players in enterprise voice tech
- Restaurant and automotive verticals showing strong demand
- Profitability timeline remains key investor question
🎲 Price Targets & Probabilities
Using gamma levels, current technical setup, and options positioning:
🚀 Bull Case (20% chance)
Target: $20.5-$21.5
- Breaks above gamma resistance cluster at $19.5-$20
- Positive earnings surprise with strong customer growth
- Major partnership announcement in automotive or enterprise
- Broader market rally lifting small-cap AI stocks
This invalidates the collar - Loses on short calls above $19.5
😐 Base Case (60% chance)
Target: $18.0-$19.5 range
- Consolidates between strong gamma support at $18 and resistance at $19.5
- Mixed earnings with growth but continued losses
- Stays range-bound through end of October
- Volatility compression after options expiration
Perfect scenario for this collar - Maximizes value of protection purchased
😰 Bear Case (20% chance)
Target: $16.0-$18.0
- Breaks below critical $18 support level
- Earnings disappointment on profitability timeline
- Broader small-cap tech selloff accelerates
- Competition concerns in voice AI market
Put protection valuable - Limits losses below $19.5 through Oct 24th
💡 Trading Ideas
🛡️ Conservative: Follow the Protection Play
Strategy: Buy protective puts (November expiration)
Buy $18 puts if you own stock or want downside protection
Risk: Premium paid ($1.00-$1.50 per contract)
Reward: Protected if stock drops below $18
Why this works: Gamma support at $18 makes it logical floor, gives more time through earnings
⚖️ Balanced: Iron Condor Range Play
Strategy: Capitalize on expected $18-$20 range
Sell $17.5 puts and $20 calls, buy $16 puts and $21 calls (Oct 31st)
Risk: $100 max loss per spread if breaks out
Reward: $40-50 credit collected if stays in range
Why this works: High IV makes premium collection attractive, gamma supports range
🚀 Aggressive: Counter the Hedge with Calls
Strategy: Bet the protection is overly cautious
Buy $19 calls or $20 calls (November expiration)
Risk: Premium paid ($1.50-$2.50)
Reward: Unlimited upside above $20
Why this works: If protection is wrong and earnings surprise positive, calls could explode with 105% IV
⚠️ Risk Factors
- Extreme volatility: 105.2% IV means wild swings are normal - option buyers pay heavy premium
- Profitability concerns: SoundHound still burning cash, timeline to profitability unclear
- Competition intensity: Facing Amazon, Google, Microsoft in voice AI space
- Small-cap liquidity: Can gap significantly on news, especially with high short interest
- Earnings timing: Unknown exact date creates uncertainty - could be sooner than expected
- Collar expiration: Short-dated protection (Oct 24th puts) means urgency about near-term risk
- Technical breakdown: Sitting right at $18 support - break below could cascade to $16
- Market environment: Small-cap AI stocks vulnerable to broader rotation pressures
🏁 The Bottom Line
Real talk: This $2.3M collar trade tells us someone with serious conviction is protecting a big SOUN position over the next 8 days. They're willing to cap gains at $19.5 to insure against drops below that level through October 24th. The gamma data validates this perfectly - hard resistance at $19.5 and solid support at $18.
If you own SOUN: Consider this a yellow flag - institutions are buying insurance. Maybe take some profits above $19 or add your own puts.
If you're watching: Wait for a clear break above $19.5 resistance or below $18 support before entering. The stock is stuck in no-man's land right now.
If you're bullish: The fact that smart money is selling calls at $19.5 suggests that's a ceiling for now. Better to wait for post-earnings clarity.
Mark your calendar: October 24th when the puts expire - this could create interesting price action as the protection rolls off. Watch for volume spikes near $19.5 resistance levels!
Disclaimer: Options trading involves substantial risk and is not suitable for all investors. This analysis is for educational purposes only and not financial advice. Past performance doesn't guarantee future results. The unusual activity described may not predict future price movements.
About SoundHound AI: SoundHound AI is an independent conversational AI platform company with a $7.43 billion market cap, specializing in voice AI technology for enterprise customers across retail, automotive, healthcare, and restaurant industries.