Is VeriFone finally ready to bounce?
David Russell | email@example.com
optionMONSTER's Heat Seeker monitoring program detected the purchase of 6,583 September 32 calls for $0.81 and the sale of an equal number of September 29 puts for $0.16. Volume was more than triple open interest at both strikes.
The trade cost $0.65 and is similar to owning shares in the maker of credit-card readers. The main difference is its short life span because the position will expire worthless if the stock remains between $29 and $32 through the end of next week.
PAY fell 1.27 percent to $31.76 yesterday and has lost more than 40 percent of its value since late April. While it was a high flyer in 2010 and early 2011, performance has weakened in the last year. Revenue missed expectations most recently on Sept. 5, and management slashed guidance after a fire in Brazil disrupted business.
The shares have been attempting to hold long-term support around $30, so today's bullish trade appears to be the work of an investor playing for quick a bounce. Their choice of the September 29 puts is interesting because PAY hasn't touched that level in almost two years. (See our Education section for more on how options can be used to manage risk.)
Nearly 19,000 options changed hands in the name yesterday, well over twice the average daily volume of about 7,000.