Beaten-down OCZ sees call buying
Mike Yamamoto | email@example.com
optionMONSTER's Heat Seeker tracking system shows that 2,335 November 5 calls traded in a strong buying pattern, almost all of them going for $0.25. The volume was more than 10 times the open interest in the strike at the beginning of the day, clearly indicating new purchases.
OCZ dropped 6.2 percent to close at $3.33 after hitting an intraday low of $3.03, its lowest price since October 2010. The company, which makes solid-state hard drives, gapped lower on Sept. 5 after cutting guidance in a preliminary report and again on Sept. 18 with the resignation of its co-founder and CEO.
OCZ, which has been the subject of persistent buyout rumors for months, is scheduled to issue the final results for its fiscal second quarter on Oct. 10.
If the long calls bought yesterday are held until expiration in mid-November, the stock would need to gain more than 57 percent for them to make money. But the premiums on those options could rise if the stock rallies before then, allowing the traders to sell them with a profit early. (See our Education section)
Yesterday's trading pushed total option volume in the name to 2.5 times its daily average. Calls outnumbered puts by nearly 6 to 1.
Disclosure: I own OCZ shares.