Options Trading News

November 1, 2013  Fri 4:45 AM CT

InvenSense fell sharply on weak guidance earlier this week, but traders are betting on a comeback.

Just shy of 3,000 January 15 calls were purchased yesterday afternoon for $2.55 to $2.70, according to optionMONSTER's Heat Seeker tracking system. The volume was double the strike's previous open interest of 1,557 contracts, indicating that this is fresh buying.

These long calls, which lock in the price where traders can buy the stock no matter how far it might climb, are looking for a rally by mid-January. But the contracts, which will track the share price closely because they are in the money, will quickly lose value if the stock doesn't move soon. (See our Education section)

Shares the company, which makes motion-detecting sensors used in mobile devices and game consoles, bounced 3.05 percent yesterday to $16.89. On Wednesday INVN gapped down from a previous close of $18.62 after the company beat quarterly estimates on its top and bottom lines but issued a disappointing revenue outlook for its next report.

Total calls outnumbered puts by 5,464 to 930, a bullish 6-to-1 ratio.
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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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