FireEye Inc (FEYE) Bulls Eye an End-of-Week Breakout

FireEye Inc's weekly 12/5 31-strike call is being bought to open today

by Karee Venema

Published on Dec 1, 2014 at 2:50 PM
Updated on Apr 20, 2015 at 5:32 PM

Bullish betting has been growing in popularity on FireEye Inc (NASDAQ:FEYE), per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Over the past 10 sessions, speculators on this trio of exchanges have bought to open 6.89 calls for every put -- a ratio that sits above 85% of similar readings taken in the past year.

In today's session, calls are crossing the tape at a 57% mark-up to the intraday average, and are outpacing puts by a more than 6-to-1 margin. Meanwhile, short-term contracts are in high demand, as evidenced by the equity's 30-day at-the-money implied volatility (IV), which is up 10.1% to 50.5%.

Most active is FEYE's weekly 12/5 31-strike call, where 2,420 contracts are on the tape. The majority of these have gone off on the ask side, IV has jumped 9.9 percentage points, and fewer than 350 contracts are currently in residence here -- collectively pointing to buy-to-open activity. Delta on the call is docked at 0.40, suggesting a slim 40% chance the option will be in the money at this Friday's close, when the weekly series expires.

This bullish positioning is a bit surprising when looking at FEYE's longer-term technical backdrop. Although the shares have edged higher today after FireEye Inc (NASDAQ:FEYE) exposed a cyberespionage operation that is looking to game the U.S. stock market, they still remain 30% lower year-to-date. What's more, today's dead-cat bounce was quickly halted by FEYE's descending 10-day moving average -- currently located at $31.47 -- with the equity last seen at $30.44.

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