Takeover Chatter Has FireEye Inc (FEYE) Call Options in High Demand

Bullish options traders continue to target FireEye Inc (NASDAQ:FEYE)

May 24, 2016 at 2:52 PM
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FireEye Inc (NASDAQ:FEYE) call options are trading at a furious pace today, as the cybersecurity stock rallies amid unsubstantiated takeover rumors. Almost 31,000 FEYE calls have traded today, compared to fewer than 2,000 puts. A good chunk of the action is taking place in FEYE's weekly 5/27 series, with the 14.50-strike call leading the way. It looks safe to assume traders are buying to open positions here, betting on the stock to extend its rally through Friday's close, when the options expire. 

FEYE call options have been popular in recent weeks, as the stock battles back from its post-earnings slide. In fact, the stock's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 7.60, putting it in the 90th percentile of its annual range. Even more telling, FEYE's Schaeffer's put/call open interest ratio (SOIR) of 0.22 marks an annual low. 

Luckily for these recent options traders, premium on near-term FEYE options is relatively muted at the moment. This is according to the stock's Schaeffer's Volatility Index (SVI) of 53%, which ranks in the low 15th percentile of its annual range. Or, said differently, the options market is pricing in relatively low short-term volatility expectations at the moment. 

As was alluded to earlier, FireEye Inc (NASDAQ:FEYE) has been moving higher since bottoming at $12.38 on May 16, gaining 25% since. This includes today's 8.8% pop that has the stock at $15.50, on pace to close above its 20-day moving average for the first time since April 29. On the other hand, FEYE's rally today seems to be stalling just below the $16 area, which marks the higher end of the stock's bear gap from earlier this month. In other news, the company is presenting at the J.P. Morgan Global Technology, Media and Telecom Conference today. 

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