Bullish Speculators Blaze Trail to Arista Networks Inc (ANET)

Arista Networks Inc was named a top pick by TV personality Jim Cramer


Published on Dec 12, 2014 at 10:35 AM
Updated on Apr 20, 2015 at 5:09 PM

Arista Networks Inc (NYSE:ANET) is down 0.3% this morning at $67.70, as Goldman Sachs' "neutral" initiation overshadows news that market pundit Jim Cramer has named the stock a top pick due to the company's "incredible growth." Yesterday, however, the shares gained 4.2%, attracting a rush of option bulls. Specifically, calls crossed at an 88% mark-up to the daily norm, and the equity's 30-day at-the-money implied volatility popped 3.9% to 55.4%, signaling elevated demand for short-term contracts.

Most active by a mile was the December 70 call, where nearly 1,200 contracts changed hands -- more than four times the next most active strike. Based a handful of factors, it appears at least some of these bets were freshly purchased, as traders wager on ANET to topple the round-number $70 mark by next Friday's close, when front-month options expire.

This bullish options trading slant is a little unusual for short-term ANET speculators. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.75 indicates put open interest nearly doubles call open interest, among options expiring in the next three months.

On the other hand, the brokerage crowd largely shares Cramer's opinion, over and against that of Goldman Sachs. Two-thirds of covering analysts rate Arista Networks Inc (NYSE:ANET) a "buy" or better, while the stock's consensus 12-month price target of $89.58 represents a 32.3% premium to current trading levels.

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