Options Trading News

May 6, 2014  Tue 4:13 AM CT

For the second time in less than a week, traders are looking for a rally in Citrix Systems.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,000 June 62.50 calls for $0.97 and the sale of an equal number of June 65 calls for $0.44 yesterday. Volume was below previous open interest in the higher strike, leaving two possible explanations for the activity.

One is that new money was put to work in both halves of the transaction. In that case, it was a bullish call spread with the potential to earn 372 percent from a rally to $65 by expiration seven weeks from now.

Alternatively, the trader might have rolled a long-call position down to the $62.50 strike, almost doubling the position's delta from 0.15 to 0.29 and increasing upside leverage. Either way, he or she paid $0.53 and is bullish on the name. (See our Education section)

CTXS rose 0.44 percent to $59.26 yesterday and has been bouncing along the lower end of its trading range for the last two years. The cloud-software company's earnings and revenue beat expectations on April 23, which could make some traders expect more upside in coming weeks.

Overall option volume in the name was more than triple its daily average for the last month, according to the Heat Seeker, with calls accounting for 77 percent of the total. Citrix also saw bullish option activity on April 30.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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