Options Traders Hit Swooning Cybersecurity Stocks

Options traders are eyeing cybersecurity stocks Lifelock Inc (NYSE:LOCK), Barracuda Networks Inc (NYSE:CUDA), and FireEye Inc (NASDAQ:FEYE)

Jun 27, 2016 at 2:13 PM
facebook X logo linkedin


The cybersecurity sector, like the broader stock market, is stuck in a tailspin. At the same time, several cybersecurity stocks are experiencing an uptick in options activity. Specifically, Lifelock Inc (NYSE:LOCK)Barracuda Networks Inc (NYSE:CUDA), and FireEye Inc (NASDAQ:FEYE) are all seeing elevated options volume. Let's take a closer look at how options traders are playing LOCK, CUDA, and FEYE. 

Put volume has exploded on LOCK today, running at 15 times the average intraday pace to arrive in the 98th percentile of its annual range. In fact, more than 11,000 puts have traded, compared to just 57 calls. Nearly all of this activity has taken place at the stock's August 13 put, though it's hard to say exactly how traders are positioning themselves at the strike. 

This activity runs counter to what's been seen in LOCK's options pits lately. Specifically, 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) comes in at 9.69 -- in the 89th annual percentile. At the same time, this may be due to short sellers hedging, since short interest represents 14% of the stock's float.

On the charts, Lifelock Inc (NYSE:LOCK) has been strong since bouncing from the $11 level back in May, gaining over 35%. And while the stock is down 4.1% today at $14.88, LOCK appears to hanging tough in the high-$14 range, which marked the shares' highs back in December, and is home to the rising 20-day moving average.

CUDA has seen intraday options action along the same lines as LOCK, with over 10,000 puts traded versus 40 calls. Moreover, put volume has hit a 52-week peak, with almost all the activity taking place at the July 12.50 strike. It's possible long positions are being initiated here, with traders betting on CUDA falling below $12.50 by the close on Friday, July 15, when front-month options expire. 

Generally, it's calls that have taken precedent in the stock's options arena. Specifically, five calls have been bought to open for each put during the past two weeks at the ISE, CBOE, and PHLX. This apparent optimism comes despite the fact the stock has lost a quarter of its value year-to-date. At last check, Barracuda Networks Inc (NYSE:CUDA) was down 4.4% at $14.07. 

Lastly, FEYE puts are trading at twice the average intraday pace, though calls have a large advantage on an absolute basis. This isn't unusual, though, since the stock's 10-day call/put volume ratio across the major exchanges of 8.35 lands in the 83rd percentile of its annual range. However, this call buying may be fueled by short sellers hedging, since -- just like LOCK -- 14% of the stock's float is sold short. 

On the charts, FireEye Inc (NASDAQ:FEYE) has been a technical dud. The shares have dropped 69% in the past 12 months, including a 4.8% loss today to hit $14.82. 

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.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI