Barracuda Networks (CUDA) Attracts Option Bulls

Barracuda Networks Inc (CUDA) touched an annual high today

Digital Content Group
Apr 7, 2015 at 2:33 PM
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Barracuda Networks Inc (NYSE:CUDA) is on fire today, tacking on 5.6% to trade at $41.70. The shares also touched an annual peak of $42.21 earlier, but it's not clear what's driving today's price action. Nevertheless, call volume is running at levels 11 times what's normally seen at this point in the day. The most popular contract is the now in-the-money July 40 call, which it appears traders are buying to open -- a theory echoed by data from the International Securities Exchange (ISE). In doing so, speculators are wagering on CUDA to continue its push above the round-number $40 mark through July options expiration.

Call buying is nothing new in the stock's options pits. Nearly 11 calls have been bought to open for every put during the past 50 sessions at the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The resulting 50-day call/put volume ratio of 10.85 outranks 89% of all other readings from the past year.

Analysts have painted a bullish picture of the shares, as well. Seven of eight covering brokerage firms say the equity is a "buy" or better.

Technically speaking, the stock has been stellar of late. Since touching a year-to-date low of $32 in early February, Barracuda Networks Inc (NYSE:CUDA) has added 30%, thanks to support from its rising 10- and 20-week moving averages.

Weekly Chart of CUDA since September 2014 with 10-week and 20-week moving averages
 

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