FireEye Inc (FEYE) Pares YTD Gains On Slow Revenue, CFO Split

FireEye Inc (NASDAQ:FEYE) is paring a portion of its year-to-date gains, after the company reported second-quarter earnings and announced a CFO split

Jul 31, 2015 at 11:54 AM
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Options bulls flocked to cybersecurity firm FireEye Inc (NASDAQ:FEYE) yesterday, ahead of the company's second-quarter earnings release. Roughly 38,000 calls were exchanged, compared to the expected 14,000. It appears speculators were buying to open weekly 7/31 50- and 52-strike calls, in hopes of post-earnings gains from the shares.

Today, though, the shares are 5.3% lower at $45.24, after the company reported disappointing revenue for the second quarter. What's more, Chief Financial Officer Michael Sheridan announced his resignation. However, the stock appears to have found a foothold atop its 120-day moving average -- a trendline that has ushered the equity to a 43% year-to-date gain, and contained a pullback earlier this week.


Widening the scope shows that put buyers have been active in FEYE's options pits in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 0.66 sits just 8 percentage points from a 52-week peak. In other words, puts have been bought to open over calls at a near-annual-high clip.

Plus, FEYE's Schaeffer's put/call open interest ratio (SOIR) of 0.88 rests higher than 81% of all similar readings taken in the past year. In simpler terms, short-term speculators have rarely been as put-skewed as they are now.

Elsewhere on the Street, analysts are mixed toward FireEye Inc (NASDAQ:FEYE). Twenty-five brokerage firms are currently covering the stock, and 13 say it's a "buy" or better, while the remaining 12 call it a "hold" or "strong sell." Some of the remaining holdouts are starting to change their tune, though, and just this past Wednesday, Oppenheimer raised its opinion on the security to "outperform" from "perform" -- which sent the shares 4% higher on the day. Should the stock resume its uptrend, a capitulation from option bears and/or another round of upgrades could translate into tailwinds for FEYE.


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