Options Trading News

April 30, 2013  Tue 4:14 AM CT

Fortinet drew bullish option activity yesterday, ahead of the network-security company's earnings report this evening.

optionMONSTER's Heat Seeker system detected the purchase of 1,500 September 25 calls at the same second for $0.55. This is clearly a new position, as the volume was well above the strike's open interest of just 95 contracts before the trade appeared.

The long calls, which lock in the purchase price of the stock, are looking for FTNT to climb above $25.55 by mid-September. These options could be sold earlier at a profit if their premiums rise with a rally before then, but the contracts will expire worthless if the shares remain below the $25 strike price. (See our Education section)

FTNT rose 2.82 percent yesterday to close at $17.85. The stock is near the low end of a wide trading range of $17 to $28 that goes back to late 2011.

Overall calls in the name outnumbered puts by 2 to 1 yesterday, a reflection of the session's bullish sentiment. Fortinet also saw call buying at the September 20 strike a week ago.

The company is scheduled to report first-quarter results after the market closes today.

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I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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