Schaeffer's 43rd Anniversary Stock Picks in 2024

Options Trader Goes All In on FireEye Inc (FEYE)

One options trader bought to open about 28,000 FireEye Inc (NASDAQ:FEYE) calls

Jun 21, 2016 at 3:11 PM
facebook X logo linkedin

FireEye Inc (NASDAQ:FEYE) is down 1.3% today at $16.76, but that hasn't kept bullish bettors out of the options arena. By the numbers, 42,000 call options are on the tape, or about five times what's expected at this point in the session. The majority of this action can be traced to one ambitious speculator.

According to Trade-Alert, one options player bought to open about 28,000 September 23 calls. By doing so, she's expressing confidence that FEYE shares can take back the 23 strike by September expiration. Alternatively, it's possible the call buyer could be a short seller hedging her bearish position. After all, short interest exploded 26% during the last two reporting periods, and currently accounts for 14% of FEYE's float.

The cybersecurity stock is no stranger to call buying. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open more than 13 FEYE calls for each put. The resultant call/put volume ratio of 13.22 sits just 2 percentage points shy of a 12-month peak. Echoing this call bias, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.30 registers in the low 29th percentile of its annual range.

Yet, the shares have been a disaster on the charts, just like this sector peer. Despite persistent M&A rumblings, FEYE has surrendered nearly one-fifth of its value in 2016 -- and the technical picture gets even bleaker going back a year.

Fundamentally speaking, FireEye Inc (NASDAQ:FEYE) shareholders voted to approve a proposal yesterday, requiring majority voting in uncontested board elections. Separately, the cybersecurity firm said cyberattacks led by China-based hackers have decreased 90% over the last two years.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.


A.I.’s Dirty Little Secret: The Real Power Behind The AI. Boom ✨

Anyone who’s seen the The Matrix movies knows that A.I. needs power.  Lots and lots of power.

If you’ve seen the movie, you also know the grizzly results of the ensuing battle for that power.

Now, Wall Street’s battle for A.I. power won’t go to such extremes. Hopefully?

A.I. needs more power and that means more opportunities for stock traders in the know.

Download your free copy of “The A.I. Revolution: 4 Stocks to Buy Now”!