Unusual Options Activity: FireEye (FEYE)

Shares of cybersecurity company FireEye (FEYE) had a slight selloff following their earnings last week. One trader is betting on a rebound in the coming weeks.

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  • That’s based on the May 21st $19 calls. Expiring in 18 days, over 8,396 contracts traded hands compared to the prior open interest of 195, for a 43-fold rise in volume. The buyer of the calls paid about $1.54 on average.

    With shares around $20, the $19 calls are already $1.00 in-the-money. They should move higher as shares do, less any decline for the small time premium.

    Shares of FireEye have spiked as high as $25 in the past year, but have come back down since. They’re now at the lower end of their trading range year-to-date.

    Despite the stock’s strong performance in the past year with an 88 percent rally, the company is not yet profitable. Nevertheless, companies continue to spend on cybersecurity needs, and FireEye has become an industry leader.

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  • Action to take: The option is a good bet on shares continuing to rebound following their earnings drop. The drop was modest overall. The options have a short time to expiration, so traders should look for quick profits, potentially in the mid-double-digit range in the coming weeks.

    Those looking for a longer-dated trade may want to go out to the fall, and consider an at-the-money trade instead, such as the September $20 calls.


    Disclosure: The author of this article has an existing position in shares, but has no intention to make further trades on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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