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Cree, Inc. (NASDAQ:CREE) has made a significant move on the charts today, up 3.2% to $57.36. This echoes the stock's longer-term uptrend, as CREE has doubled in value over the past 52 weeks -- and that's after a mid-August, earnings-related bear gap, during which the shares shed more than a quarter of their value in a single week. Elsewhere, in options land, calls are more popular than usual, as volume is 38% higher than normal. Attracting the most attention is CREE's December 62.50 call.
Almost 3,800 contracts have traded at the strike, with 91% at the ask price, suggesting they were purchased. Furthermore, implied volatility is up 2.4 percentage points, so the calls were likely freshly initiated at a volume-weighted average price (VWAP) of $3.30. Therefore, in order for the traders to profit, they need Cree shares to advance from their current perch beyond $65.80 (strike price plus VWAP) by December options expiration.
Although CREE is a long-term technical standout, as alluded to earlier, the shares have struggled of late. During the past 20 sessions, the stock has lagged the broader S&P 500 Index (SPX) by over 22 percentage points. At the same time, short interest increased 9.3% during the most recent reporting period. Long story short, it's possible that some of today's call buyers are hedging their short stock positions, rather than being true bulls.
In company news, the National Aeronautics and Space Administration (NASA) announced its Washington, D.C., headquarters has been outfitted with Cree, Inc.'s (NASDAQ:CREE) high-efficiency CR Series LED Troffers (subscription required). "No other manufacturer offered the combination of performance, pricing and efficacy we desired," said Tony Roberts, senior chief engineer with the headquarters' owner. "We continue to be impressed by the improved lighting quality and significant savings the CR22 troffers provide."
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