Option Bulls Can't Get Enough of FireEye Inc (FEYE)

FireEye Inc (NASDAQ:FEYE) has been the target of call traders recently

by Karee Venema

Published on Jun 16, 2016 at 10:20 AM

Option bulls bombarded FireEye Inc (NASDAQ:FEYE) on Wednesday, after Bloomberg reported the cybersecurity firm has turned down multiple buyout offers this year. Among the potential suitors was Symantec Corporation (NASDAQ:SYMC), which was in the M&A spotlight earlier this week. As FEYE stock soared 4%, call volume jumped to two times the average daily pace, with buy-to-open activity occurring at the June 13.50 strike. In other words, these options traders bet on a bigger rally through tomorrow's close, when front-month options expire.

Call traders are no stranger to FEYE's options pits, though. In fact, total call open interest on the stock outweighs put open interest by a more than 3-to-1 margin, and all 10 of FEYE's top open interest positions are calls.

Diving deeper, the equity's January 2017 20-strike call is home to peak open interest of 7,368 contracts. Shorter-term traders, meanwhile, have set their sights on FEYE's July 17 call, where 5,792 contracts reside. According to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), a number of long positions have been initiated at the back-month call in recent weeks.

Today, calls have once again taken the lead over puts, with the former outpacing the latter by a more than 5-to-1 margin in early trading. It looks as though there could be some buy-to-open activity happening at FEYE's June 15.50 call, as well as the July 17 call.

Unfortunately for this recent batch of call buyers, FireEye Inc (NASDAQ:FEYE) is down 0.7% at $15.94, amid broad-market headwinds. Regardless of where the stock settles at options expiration, though, losses for call buyers are capped at the initial premium paid.

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