Trader bets on rally in next week.
With 8 days until expiration, the February 7th $16 call options on FireEye (FEYE) saw an explosion in volume, going from 170 open contracts to over 7,350—a 43-fold rise.
The bet, which is essentially at-the-money as shares trade around $16, cost the option buyer about $0.50, or $50 per contract.
- Turn Your Downtime Into Cash!
Real people have made big money trading from home…...
$3,000... $5,500... and even $12,000... in ONE day! (All with fast 30%... 55%... and even 120% gains- often before they finish their first cup of coffee!)
Many had NO experience...
Former Chicago Board Options Exchange trader reveals the “5 Secret Trading Strategies to Win Every Day in the Market"...For a limited time- you can claim your copy...
The trade will profit the buyer only if shares clear $16.50 by the option expiration.
With FireEye reporting earnings on February 5th, this trade is a bet on a rally in shares after earnings.
Action to take: Speculators looking to potentially double their money in a week—or lose a small sum—may like this options trade. If shares drop for any reason after earnings, however, this trade will likely go to zero quickly, making for a very binary trade.
We see further upside in FireEye and other companies in the cybersecurity space, although it will take longer than a week to play out. With shares down 10 percent over the past year, the long-term struggle is clear.
Based on how well earnings season has been going so far, the trade has a good chance of producing some quick profits. For traders who like to have more time for the trade to work out, a longer strike date would be better.
Shares are also attractive in the $16 range for long-term buyers as well.