Upside option positions in FireEye were en fuego after the company reported positive earnings this week.
On March 20, Investitute’s market scanners detected the purchase of 5,000 June $12 for $1.10 with shares at $11.62. The volume was well above the strike’s previous open interest of 3,438 contracts, showing that this was fresh buying.
Today those calls traded as high as $2.95, nearly triple their purchase price. Shares had surged 28 percent in that time, an impressive return but nowhere near the percentage gain booked by those calls.
Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares.
FEYE rose 3.78 percent today to close at $14.82. The cyber-security firm gapped up from the $12 level on Tuesday after announcing strong quarterly results and higher-than-expected guidance.