Is OCZ Technology still in play?
David Russell | email@example.com
The maker of solid-state hard drives got hammered today and plunged to a new 52-week low after issuing a weak preliminary sales report for its fiscal second quarter. About an hour into the session, however, our Heat Seeker monitoring system detected heavy volume in the October 7 calls and the October 8 calls.
Roughly 4,000 contracts traded in each, with the October 7s going for $0.15 and the October 8s for $0.10. Volume was more than twice open interest at each strike.
OCZ trades at $4.30 this afternoon, down some 20 percent in the session, so those call buyers are looking for the stock to roughly double in the next six weeks. The size of that move in such a short time suggests that they're positioning for the company to be acquired.
Rumors had swirled around the name in late July, with the buzz pointing to disk-drive maker Seagate Technology as a potential buyer. OCZ had approached $8 during that time, and today's traders apparently believes that it's worth making a cheap bet now. See our Education Section for more on how to limit risk and time expected news events.
Overall option volume is 5 times greater than average in the name so far today, with calls outnumbering puts by more than 2 to 1.