Sourcefire is ripping today, and some traders don't want to be
optionMONSTER's Heat Seeker monitoring system detected the purchase
of almost 1,900 April 50 calls, most of which priced for $2.65 to
$2.90. Volume was 27 times open interest at the strike, indicating
that new money was put to work.
Those calls lock in the price where investors can buy shares in the
maker of computer-security products. That will result in some nice
leverage if it continues to rally, but they'll also lose their
entire investment if it stalls or retreats.
FIRE gapped higher this morning and us currently up 14.2 percent to
$48.25 in afternoon trading. The move comes after fourth-quarter
revenue blew past estimates and guidance for the current period was
better than expected. It was at least the fifth straight quarter
with strong results.
Shares are now around the same level where they peaked in November
and December. They're also parked at their 200-day moving average,
which could be making some traders nervous about a pullback.
is an ideal way to deal with such a setup because they provide
upside exposure at a fraction of the share price. That limits risk
and eliminates the need for a stop loss. (See our
section for more how options can be used to manage risk.)
Some 6,100 contracts have traded in FIRE so far today, quadruple
the daily average. Calls account for nearly three-quarters of the
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