Bulls Swarm Cybersecurity Stocks; FireEye Inc (FEYE) in Focus

Cybersecurity stocks are in focus today, with FEYE grabbing attention among option bulls

Aug 5, 2015 at 12:31 PM
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FireEye Inc (NASDAQ:FEYE) and its sector peers are higher, and StockTwits is abuzz with unconfirmed buyout rumors surrounding FEYE and International Business Machines Corp. (NYSE:IBM). Meanwhile, cybersecurity is in focus on Capitol Hill, with the U.S. Senate considering the Cybersecurity Information Sharing Act of 2015, which some speculate could translate into hefty government contracts for cybersecurity companies. It's also the focus in Las Vegas, where security professionals gathered for the Black Hat conference to discuss cybercrime and vulnerable businesses.

Whatever the driving force, FEYE is up 3.3% at $44.88, and calls are trading at three times the normal intraday clip, with eleventh-hour speculators buying to open the weekly 8/7 44.50-strike call. The calls will gain value the higher FEYE climbs north of $44.50 through Friday's close, when the contracts expire. 

This affinity for calls marks a change of pace for FEYE. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio sits at an annual high of 0.47. In other words, option buyers have picked up FEYE puts relative to calls at a much faster-than-usual clip during the past 10 weeks. 

On the charts, FEYE has gained more than 42% in 2015, with pullbacks contained by its 32-week moving average. After a poorly received earnings report last week, FEYE retreated, and its 14-day Relative Strength Index (RSI) was docked at 35 by Tuesday's close -- on the cusp of oversold territory. Should FEYE resume its long-term uptrend, a mass exodus of bears could add fuel to the stock's fire. 

Meanwhile, Cyberark Software Ltd (NASDAQ:CYBR) has added 4.5% to flirt with $60.14, and VASCO Data Security International, Inc. (NASDAQ:VDSI) is up 3.2% at $19.40. Palo Alto Networks Inc (NYSE:PANW) has gained 1.8% to dock just south of $189, while Fortinet Inc (NASDAQ:FTNT) has followed suit, up 1.8% at $48.51.


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