Ambarella Inc (AMBA) Bulls Roll the Dice On Higher Highs

Ambarella Inc's February 48 call is seeing buy-to-open activity today

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Published on Nov 3, 2014 at 12:10 PM
Updated on Apr 20, 2015 at 5:32 PM

Ambarella Inc (NASDAQ:AMBA) earlier hit a record high of $47.20, and at last check, was still 5.4% above breakeven at $46.68, thanks to a halo lift from sector peer GoPro Inc (NASDAQ:GPRO). In the stock's options pits, calls are flying off the shelves at double the expected intraday rate, and AMBA's 30-day at-the-money implied volatility (IV) has popped 4.6% to 58.7%, signaling elevated demand for short-term strikes.

Nevertheless, AMBA's most active option is of the longer-term variety. Specifically, the February 48 call is outpacing all other strikes, with more than 500 contracts on the tape. Almost all of them have crossed at the ask price, IV has edged higher, and open interest is nearly negligible at the strike. In other words, all signs point to newly bought bullish bets.

In short, today's call buyers expect Ambarella Inc (NASDAQ:AMBA) to continue its quest into uncharted territory, toppling $48 by the close on Friday, Feb. 20, 2015 -- when the aforementioned options expire. Gains are theoretically unlimited to the upside, while losses are capped at the initial premium paid, should the traders be holding onto out-of-the-money contracts at expiration.


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