Somebody thinks they know something in Quest Software.
The maker of enterprise software gapped higher last month after agreeing to be purchased for $23 a share. It has remained above that level since the deal was announced, indicating that the market expects a higher price.
Today's option activity echoes that sentiment. A block of 5,000 May 25 calls was bought for $0.45 and an equal number of May 30 calls were sold for $0.05. There was no open interest in either strike before the trade hit.
The investor paid $0.40 and is now positioned to leverage upside in the stock. This bullish call spread will make money anywhere above $25.40 and earn a maximum profit of 1,150 percent if QSFT closes at or above $30 on expiration. (See our Education section)
QSFT is up 0.15 percent to $23.28 today. Total option volume is more than 300 times greater than average so far today, with calls accounting for more than 99 percent of the activity.
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