Symantec Corporation (SYMC) Option Bulls Eye Higher Highs

Symantec Corporation (SYMC) is fresh off an 11-year high following upbeat earnings

Aug 5, 2016 at 10:55 AM
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As Symantec Corporation (NASDAQ:SYMC) booms on an earnings beat and encouraging revenue forecast, the cybersecurity stock's options are in high demand. This is especially true on the call side of the aisle, where the roughly 7,200 contracts on the tape represent nsix times the usual intraday amount. In fact, call volume currently rests in the 99th percentile of its annual range.

Diving deeper, the most active SYMC option is the January 2017 24-strike call. Possible buy-to-open activity is detected here, suggesting traders foresee the shares toppling $24 -- and muscling into multi-year-high territory -- by January expiration. Bullish options betting has been popular at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of late. In the last 10 days, for example, traders have bought to open 6.67 calls for every put -- a ratio that ranks in the top quartile of its annual range.

At the same time, though, SYMC short interest recently exploded. During the last two reporting periods, these bearish bets jumped an astounding 72.3% to roughly 29 million shares, and it would take one week for short sellers to cover these positions, at the cybersecurity stock's average daily trading rate. The implications of this are twofold. First, it means some of the recent call buying may have been protective in nature -- a smart strategy, given what's transpired today after earnings. Second, it means a short-squeeze situation could push SYMC further up the charts.

The shares could also benefit from a capitulation among skeptical brokerage firms. After all, 13 of 17 analysts rate SYMC a "hold" or "sell." In fact, it appears this is already beginning to happen. Following Symantec earnings, Oppenheimer bumped its rating on the stock to "outperform" from "perform," while no fewer than seven analysts lifted their price targets. The only brokerage firm to show any reservations post-earnings is Barclays, which reinstated coverage with a tepid "equal weight" opinion and a $24 target price.

This raft of positive analyst attention is probably contributing to Symantec Corporation's (NASDAQ:SYMC) big day -- in contrast to this struggling sector peer. At last check, the cybersecurity stock has soared nearly 6% to trade at $22.28, and earlier touched an 11-year high of $22.58

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