Here's why traders are watching Spotify ahead of Slack's direct listing

Options traders crank up the volume on Spotify

All eyes are on messaging platform Slack ahead of its upcoming direct listing.

But just a year ago, all eyes — and ears — were on another, similarly structured market debut: that of Spotify, the music streaming service that listed directly on the New York Stock Exchange in April 2018.

Rather than using an initial public offering, a company can go public via a direct listing, when most of the shares become instantly available for trading — without a promotional roadshow or underwriters and middlemen who buy shares ahead of an IPO.

Since its debut, Spotify's stock has returned to near its opening price of around $150, having peaked near the $200 level last July.

Now, experts are wondering what the music stock's trading patterns might be saying about what investors should expect for Slack's trading debut.

"Unlike some of the IPOs, where the options markets really had very wide spreads and had very much lower forward prices due to the very high borrow costs, essentially, because of the high short interest," the trading in Spotify doesn't reflect as many bets on the stock declining, says Mike Khouw, co-founder and chief strategist at Optimize Advisors.

In reality, the bullish bets on Spotify outnumber the bearish ones, with average call volume topping average put volume by "roughly 2 to 1," Khouw said Wednesday on CNBC's "Options Action."

August $160 strike calls, priced at about $5, garnered the most interest, the strategist said. That means buyers are betting that Spotify shares could climb at least 7% from where it was trading just after Thursday's opening bell.

So, considering traders' overall bullishness on Spotify despite its meager, less-than-3% gain since its listing, Slack's listing will be one to watch, Khouw said. Slack's reference price was set at $26 a share on Wednesday.

"It'll be interesting when we see Slack actually [trade], whether that's what we see: something more like Spotify and something less like Beyond [Meat], Uber and Lyft," he said.

Spotify shares rose by nearly 3% in early Thursday trading.