FireEye Inc (FEYE) Breakout Inspires Bullish Options Betting

FireEye Inc (FEYE) call options have been in extremely high demand of late

by Alex Eppstein

Published on Sep 1, 2016 at 2:43 PM
Updated on Jun 24, 2020 at 10:16 AM

FireEye Inc (NASDAQ:FEYE) call buyers were out in force yesterday, and it's more of the same this afternoon. Specifically, call options are running at 1.7 times the rate normally seen at this point in the day, with volume ranking in the 94th annual percentile. What's more, calls outstrip puts by a more than 3-to-1 margin.

Digging deeper, FEYE's weekly 9/2 and 9/9 15-strike calls appear to be seeing buy-to-open activity. If this is the case, the options traders expect the cybersecurity stock will extend its rally through the respective expiration dates, at the close this Friday and next.

The recent uptick in call buying is reflected even more clearly in FEYE's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 29.52. This top-heavy reading represents an annual peak, meaning traders have never preferred bullish bets over bearish by a greater degree.

Today's appetite for long calls makes plenty of sense, with the cybersecurity stock ripping up the charts. At last check, FEYE has shot 5.6% higher to $15.16, despite the absence of a clear catalyst.

That said, it has not always been so for FireEye Inc (NASDAQ:FEYE), as evidenced by its year-over-year loss of 60%. This fact, combined with heavy levels of short interest (i.e., 14.8% of the stock's float), suggests some recent call buyers -- particularly at out-of-the-money strikes -- may in fact be short sellers purchasing options protection.

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