Call Players Swarm FireEye, Inc., Cyberark Software Ltd Amid Fed Breach

FireEye Inc (NASDAQ:FEYE) and Cyberark Software Ltd (NASDAQ:CYBR) are capitalizing on a big federal government data breach

Jun 5, 2015 at 11:26 AM
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Following reports that the federal government has been hacked, cybersecurity firms FireEye Inc (NASDAQ:FEYE) and Cyberark Software Ltd (NASDAQ:CYBR) are trading higher today. Specifically, at least four million current and former government workers' data has been compromised, with officials claiming the attack originated in China. At last check, FEYE was up 4.1% at $49.94 -- an annual high -- while CYBR was 6.3% higher at $65.81. The positive price action has prompted a rush of call activity in each stock's options pits, with the contracts crossing the tape at two times the average intraday pace.

Drilling down, FEYE bulls appear to be buying to open the July 50 call, as they bet on the security to topple the round-number $50 mark by the close on Friday, July 17 -- when back-month options expire. While this would mark a fresh annual-high for the shares, FEYE is no stranger to technical success, adding 58% in 2015. Moreover, the company just yesterday unveiled a new partnership.

Longer term, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have shown a distinct preference for calls over puts. In fact, over the past 20 sessions, traders have bought to open 3.42 calls for each put. With 11.2% of FireEye Inc's float sold short, though, some of this call buying may be a result of shorts protecting against any additional upside.

Meanwhile, CYBR traders have turned their attention to the front-month series, where it looks like new positions are being purchased at the June 65 call. These speculators are rolling the dice on the shares extending their lead above the $65 mark over the next two weeks.

Similar to its sector peer, CYBR has been a standout on the charts, boasting a 66% year-to-date lead. However, traders at the ISE, CBOE, and PHLX have bought to open two puts for every call throughout the last 10 sessions. Given Cyberark Software Ltd's technical tenacity, it's possible a portion of this put buying is a result of shareholders hedging their positions against possible losses.
 

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