FireEye Weekly Options Traders Bet on a Quick Comeback

Calls are again active on FireEye

Aug 22, 2017 at 2:27 PM
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Options traders are again targeting cybersecurity issue FireEye Inc (NASDAQ:FEYE). The shares are trading up 2.9% today at $14.17, and call options are popular. The contracts are crossing at four times the pace expected for this point in the day, with volume running in the 98th annual percentile. Traders are targeting the weekly 8/25 14.50- and 15-strike calls, betting on FEYE stock rising above the strikes by the time the options expire this Friday. The weekly 9/1 15-strike looks to be seeing notable buy-to-open activity, as well. 

This focus on calls is nothing new. FireEye has a 10-day call/put volume ratio of 4.57 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), meaning more than four calls have been bought to open for every put during the past two weeks. Moreover, this ratio ranks in just 46th annual percentile, showing it's far from unusual. 

No matter your stance on FEYE shares, it's a good time to target short-term options contracts. This is according to the stock's Schaeffer's Volatility Index (SVI) of 32%, which sits just 1 percentage point from a 12-month low. In other words, volatility expectations are relatively low at the moment for near-term options. 

Elsewhere, short interest remains elevated on the security, rising 5.4% in the most recent reporting period. Almost 31 million FireEye shares are currently sold short, or about 5.6 times its average daily trading volume. Considering this, some call buyers may be shorts using options to hedge

At these levels, FEYE sports a year-to-date gain of 19%, with its 52-week high sitting up at $16.40. The stock has seemingly found a new home above its 50-week moving average, a level it conquered after its early May bull gap. But as you can see, the $16 level has stifled recent breakout attempts. 

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