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Stratasys, Ltd. (NASDAQ:SSYS) blew away analysts' second-quarter earnings expectations this morning, and raised its full-year profit and revenue outlook. The results have shares of the 3-D printer maker soaring, up nearly 22% at $120.40. Likewise, options activity is accelerating, with bulls mostly placing short-term bets on the equity.
Diving right in, calls are trading at 28 times the usual intraday pace, with roughly 14,000 contracts on the tape. Most active by a healthy margin is SSYS' now in-the-money August 120 call, where nearly 2,000 contracts have changed hands. It appears these calls are being bought to open, as the majority have crossed at the ask price, and volume outstrips current levels of open interest at the strike.
As alluded to, the front-month contracts are currently in the money. However, in order for the buyers to profit, SSYS must rally past $121.55 -- the strike plus the volume-weighted average price of $1.55 -- by next Friday's close, when the calls expire. Gains will accumulate north of here, and are potentially unlimited. By contrast, if the stock backpedals below $120 at options expiration, the traders risk losing the initial premium paid.
Taking a step back, in spite of today's huge rally, Stratasys, Ltd. (NASDAQ:SSYS) remains about 11% lower on a year-to-date basis. In fact, in the last few sessions prior to this morning's bull gap, the shares had been trading in territory not seen since mid-June.