Bet on shares rallying through January.
The January 17th, 2020 $45 call options on Vicor Corporation (VICR) saw over 1,100 contracts trade hands against a prior open interest of just over 100, for a 10-fold rise in volume.
In order for the option to move in-the-money in the next 44 days before expiration, shares of the company will need to rally about $4 per share from their current price near $41, about a 10 percent increase.
Vicor, a manufacturer of modular power systems, has lagged the overall market in the past year, as have many companies in the industrial space, but also trades at a hefty price of 44 times earnings. Since the end of September, however, shares have started to move higher.
Action to take: Shares of the company have traded closer to $50 in the past year, so there’s a potential 20 percent upside in shares before they hit their old 52-week high. While the company is a bit expensive on a valuation basis, a buy now to play out the current uptrend could be good for a solid gain in the next few months.
Speculators may want to get in on the January trade, which goes for about $1.20, or $120 per contract, as a cheaper way to bet on a continued move higher in shares. The option could deliver mid-double-digit gains in the next few weeks, but look to take a profit if shares can’t get near the strike price.