FireEye, Inc. (FEYE) Short-Term Bear Eyes More Downside

One put buyer is jumping on FireEye Inc (FEYE) amid a rare stint of weakness


Published on Apr 17, 2015 at 11:07 AM
Updated on Apr 20, 2015 at 5:32 PM

Put volume is running at double what's normally seen around midday in FireEye Inc's (NASDAQ:FEYE) options pits. On a closer look, much of today's action comes from one trader, who bought to open 1,000 contracts at the weekly 4/24 39-strike put. Paying a premium of $0.40 apiece, the speculator handed over a total of $40,000 (premium paid * number of contracts * 100 shares per contract) to wager on the shares falling below $39 by next Friday's close, when the weekly series expires.

Coming into today, short-term speculators had actually been more call-skewed than normal. This, according to FEYE's Schaeffer's put/call open interest ratio (SOIR) of 0.60, which ranks in the 33rd annual percentile. With the equity's elevated short interest, though, there's always a chance that increased interest in calls could be related to short sellers hedging their bets. Specifically, 13% of the equity's float is sold short, accounting for nearly a week's worth of trading, at normal daily volumes.


The heavy short interest is somewhat strange, given FireEye Inc's (NASDAQ:FEYE) technical history. So far in 2015, the shares have gained 30%, and should it add to this impressive lead, some of the weaker shorts could hit the exits and create a fresh wave of buying power. Today, though, FEYE is 2.3% lower at $41.05.

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