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Option players are circling around Akamai Technologies, Inc. (NASDAQ:AKAM - 38.92) calls in today's session. Around 2,300 calls have crossed the tape so far, compared to fewer than 200 puts. The majority of this volume has centered on AKAM's January 2013 42-strike call, where a healthy portion of the more than 1,450 contracts have traded at the ask price. Additionally, implied volatility was last seen 1.8 percentage points higher, and volume is outstripping open interest, pointing to the initiation of new bullish positions.
In order for these out-of-the-money calls to be profitable, AKAM needs to rise above the $42.59 mark (the strike plus the volume-weighted average price [VWAP] of $0.59) by Jan. 18, when these options expire. This breakeven level represents a 9.4% premium to the stock's current perch.
Expanding the scope, it seems bullish bets have been quite popular on AKAM in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly three calls for every put during the past 10 sessions. This ratio ranks in the 78th percentile of its annual range, implying calls have been accumulated over puts at a faster-than-usual clip.
This bullish bias among option traders is understandable when looking at AKAM's technical backdrop. On a year-to-date basis, the stock has added nearly 21%. What's more, since tagging an annual low of $25.90 on June 5, the shares have surged more than 50%. The equity recently bounced off its ascending 50-week moving average, and this trendline could continue to serve as a foothold going forward.
In today's session, though, AKAM is following the broader equities market into the red, and was last seen 0.4% lower. However, the stock spent some time over the past week trading north of its upper Bollinger Band, suggesting a near-term consolidation may have been in the cards. Should AKAM fail to topple the $42.59 level over the next five weeks, the most the aforementioned call buyers can lose is the initial premium paid.