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October 26, 2012  Fri 11:48 AM CT

VeriSign plunged after cutting guidance, but investors are looking for a rebound.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 10,000 January 41 calls for $1.51 and the sale of an equal number of January 45 calls for $0.51. Volume was more than 9 times open interest at both strikes, indicating that new positions were opened.

The trade, known as a bullish call spread, cost $1. It will start making money if the Internet-security stock pushes over $42, with a maximum profit of 300 percent at or above $45. (See our Education section for more on how options can be used to generate leverage.)

VRSN is down 18.78 percent to $37.85 this afternoon. The company yesterday reported results slightly ahead of forecasts but trimmed the top end of its full-year revenue guidance. Shares had been hovering at their highest level in more than a decade before that news hit, so the bears seized on the opportunity to hammer the stock.

There was also heavy buying in the January 40 calls for $1.45 to $1.65, but volume was below open interest in those contracts.

Total option volume is more than 160 times average levels so far today, according to the Heat Seeker. Calls outnumber puts by more than 5 to 1.
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