Unusual Options Activity: Fidelity National Information Services (FIS)

Shares of banking technology company Fidelity National Information Services (FIS) have been in a steady downtrend over the past year, shedding more than a third of their value. Shares have started to trend up in recent weeks, and now one trader sees further upside ahead.

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  • That’s based on the July $140 calls. With 106 days until expiration, 39,195 contracts traded against a prior open interest of 248, for a staggering 158-fold surge in volume. The buyer of the calls paid $0.43 to make the trade.

    Shares currently go for about $102, so they would need to rise nearly 40 percent for the option to move in-the-money in just over three months.

    The stock has been steadily moving down over the past year, even as earnings have surged by 180 percent and revenue has risen by 11 percent. With a narrow profit margin of 3 percent and a high PE ratio over the past year, the picture still looks to be that of an undervalued company.

    Action to take: Shares trade for 13 times forward earnings, and at today’s prices, the company’s increased dividend comes out to a 1.9 percent starting yield. Shareholders could nab sizeable capital gains on a rebound.

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  • For traders, the July $140 calls are inexpensive enough to offer triple-digit returns on a move higher in the coming months. Traders may want to take the first jump higher in shares and nab a quick profit on this rebound play.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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