$FEYE calls soar sixfold in hours

Option traders who opened bullish positions in FireEye this morning were racking up huge gains by the afternoon.

Barely an hour after the opening bell, Investitute’s tracking systems detected simultaneous call volume in two strikes expiring on Sept. 7 with shares trading at $15.13:

–4,300 Weekly $15 calls were purchased for $0.34 to $0.54 above above open interest of 231 contracts.
–2,400 Weekly $15.50 calls were bought for $0.18 to $0.29 above open interest of 356.

Investitute co-founder Pete Najarian cited the unusual activity about two hours later on CNBC’s “Halftime Report.”

The Weekly $15s traded as high as $1.57 this afternoon, more than 4 times their initial purchase price. The Weekly $15.50s traded up to $1.09, 6 times their original price. The stock gained 7.2% at the same time, showing how quickly options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

FEYE spiked up to $16.38 this afternoon before settling back to close at $15.76, still up 5.77% on the session. The cybersecurity company first rallied after Najarian’s appearance and surged again later on news that the firm had helped Google and Facebook identify disinformation campaigns linked to Russia and Iran, respectively.