Lifelock Inc (LOCK) Traders Eye a Sustained Move Higher

Lifelock Inc (LOCK) call buyers are counting on a move back above $13 by February expiration

by Alex Eppstein

Published on Jan 22, 2016 at 2:58 PM
Updated on Jun 24, 2020 at 10:16 AM

Fraud protection provider Lifelock Inc (NYSE:LOCK) is up 0.7% at $12.16, finding a foothold atop its 100-day moving average just a day after sinking on some major C-suite news and an update to its full-year outlook. Still, the shares have come a long way since their August low of $7.18, largely due to a late-October settlement with the Federal Trade Commission (FTC).

In today's trading, calls are flying off the shelves at four times the expected intraday rate. Almost all of the activity is transpiring at the out-of-the-money February 13 call, where 1,000 contracts are on the tape. Speculators buying to open these calls expect LOCK to muscle back atop $13 by the close on Friday, Feb. 19, when the front-month options expire. The stock was sitting north of this strike as recently as yesterday.

Bullish bets are standard fare for LOCK options traders. During the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has amassed a call/put volume ratio of 2.06 -- in the 92nd percentile of its annual range. In other words, traders have been buying to open calls over puts at a faster-than-usual clip in recent months.

Analysts are high on Lifelock Inc (NYSE:LOCK), too. Three-quarters of covering brokerages rate the stock a "buy" or better, with not a single "sell" rating to be found. Plus, the consensus 12-month price target of $17.75 stands in territory not explored since December 2014.

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