Stratasys, Ltd. Bulls Bet On End-of-Year Gains

Stratasys, Ltd.'s December 105 call found plenty of buyers on Friday

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Published on Nov 10, 2014 at 10:29 AM
Updated on Apr 20, 2015 at 5:32 PM

Stratasys, Ltd. (NASDAQ:SSYS) has been a long-term technical underperformer, down nearly 23% year-to-date to trade at $103.90. In fact, the stock lost 14.4% just last week, due to a poorly received quarterly earnings report. Nevertheless, one group of options traders Friday wagered on a move higher by the end of the year.

Taking a quick step back, SSYS calls changed hands at more than twice the usual daily pace on Friday, and nearly tripled the number of puts traded, as well. What's more, the stock's 30-day at-the-money implied volatility edged 2.6% higher to 42.9%, suggesting short-term strikes were in demand.

Digging deeper, the equity's most active option was the December 105 call, where 2,000-plus contracts crossed the tape. The majority did so at the ask price, and open interest soared over the weekend, making it safe to assume bullish bets were initiated. This theory is echoed by Trade-Alert.

By purchasing the near-the-money calls to open, the traders expect Stratasys, Ltd. (NASDAQ:SSYS) will topple $105 by the close on Friday, Dec. 19, when the back-month options expire. More specifically, gains will accrue on a move north of breakeven at $110.07 (strike plus the volume-weighted average price of $5.07), while the maximum potential loss is capped at the initial premium paid, should the stock settle south of the strike at expiration.


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