FireEye (FEYE) Calls Hot Amid Rumored Blue-Chip Bid

Rumors are circulating FireEye Inc (NASDAQ:FEYE) could be a takeover target for Cisco Systems, Inc. (NASDAQ:CSCO)

May 13, 2015 at 1:22 PM
facebook twitter linkedin

FireEye Inc (NASDAQ:FEYE) is soaring today -- up 4.4% at $43.13 -- amid unconfirmed rumors of a potential $9 billion bid from blue chip Cisco Systems, Inc. (NASDAQ:CSCO). In the options pits, calls are popping, with the contracts crossing at four times what's typically seen at this point in the day -- and outpacing puts by a more than 10-to-1 ratio.

Drilling down, each of CSCO's 10 most active options are calls, with the equity's in-the-money May 41 and 42.50 strikes garnering notable attention. It seems safe to assume new positions are being purchased, meaning speculators are rolling the dice on FEYE extending today's advance through this Friday's close -- when front-month options expire.

While option traders have been showing a growing appetite for long calls of late, the withstanding trend has been toward put buying. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), FEYE's 10-day put/call volume ratio of 0.50 rests in the 79th annual percentile. Simply stated, puts have been bought to open over calls at a faster-than-usual clip in recent weeks.

Today's burst of buying power just echoes the stock's longer-term technical trajectory, with the shares up almost 37% year-to-date, thanks to a lift from their 80-day moving average. A continued shift in sentiment among the options crowd could translate into additional gains for FireEye Inc (NASDAQ:FEYE) down the road.


These investors are using the market's volatility to their advantage and scoring triple-digit gains on many of their trades.

Even in today's sideways bear market, this trading strategy has continued to provide consistency and profitability to a small group of investors. By using this approach, these traders are removing directional risk and still hitting triple-digit returns. If you want access to this strategy, and lower risk with higher returns sounds good to you, then don't wait another minute.

Join us now to receive our next trades the moment they come out!


Common mistakes options traders make


Special Offers from Schaeffer's Trading Partners