FireEye, Inc. (FEYE) Calls Hot on Whitman Nod

FireEye Inc (FEYE) is sizzling, thanks to a positive mention from Hewlett-Packard Company (HPQ) CEO Meg Whitman

by Alex Eppstein

Published on May 22, 2015 at 10:39 AM

FireEye Inc (NASDAQ:FEYE) has jumped 4.3% this morning to trade at $45.14, following a plug from Hewlett-Packard Company (NYSE:HPQ) CEO Meg Whitman during an interview with CNBC.  As such, FEYE calls are flying off the shelves at four times the usual intraday rate, and three times the pace of puts.

The cybersecurity stock's most active strike is the out-of-the-money June 46 call, which is seeing possible buy-to-open activity. By initiating these positions, option bulls anticipate FEYE will topple $46 by the close on Friday, June 19, when the front-month series expires. The shares haven't explored territory north of $46 since late February, but delta on the option has jumped to 0.45 from 0.30 at Thursday's close, signaling growing odds of an in-the-money finish.

A capitulation among skeptics on Wall Street could give FEYE the boost it needs. For instance, half of the analysts tracking the stock consider it a "hold" or worse, and its average 12-month price target of $47.50 stands at a slim 5.2% premium to current trading levels. Also, 11.6% of the equity's float is sold short, suggesting there's plenty of sideline cash available to fuel a short-covering rally.

On a longer-term basis, FireEye Inc (NASDAQ:FEYE) has been impressive. Since the end of 2014, the shares have surged over 43%, ushered higher by their 80-day moving average.


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