Calls bet tide is turning in Riverbed
Mike Yamamoto | email@example.com
More than 1,800 January 22 calls traded in a strong buying pattern yesterday, with premiums rising from $0.21 to $0.35 throughout the day, according to optionMONSTER's Heat Seeker tracking system. The volume was more than double the strike's open interest of 782 contracts at the beginning of the day, indicating that these are new purchases.
RVBD jumped 7.3 percent to $21.16, breaking above resistance at its 200-day moving average. Shares of the networking-technology company had gapped higher on strong quarterly results and climbed to resistance around $24 in October, only to plunge back below $18 at the end of the month on news that it was buying software maker Opnet for $1 billion. Until yesterday it had been trading sideways between about $16.50 and $20.
The long calls purchased yesterday, which lock in the price where traders can buy shares, are looking for the stock to gain at least 5 percent by expiration on Jan. 18. The options will expire worthless if RVBD is below the $22 strike price at that time. (See our Education section)
Total option volume in the name exceeded 9,500 contracts, 7 times higher than its daily average of 1,360 in the last month. Calls outpaced puts by nearly 3 to 1.