Bulls connect with F5 Networks

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F5 Networks has been working its way higher, and the bulls are looking for the move to continue.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,706 July 120 calls for $1.20 and the sale of a matching number of July 110 puts for $1.19. Volume was more than 5 times open interest at both strikes, which indicates that new money new positions were initiated.

Owning calls locks in the price where investors can buy a stock, which lets them profit from a rally. Selling puts generates income but forces them to buy shares at a lower level in the event of a drop. Combining the two strategies is similar to owning shares, making money to the upside and losing to the downside.

The main difference is that the option strategy cost just $0.01 to implement and will track movements in the provider of networking software less closely as expiration approaches. (See our Education section for more on how time affects the value of options .)

FFIV fell 1.72 percent to $108.55 on Friday but came into the session up 7 percent in the preceding two weeks. The network-technology company has beaten earnings expectations for the last five quarters.

Overall option volume in the name was 12 times greater than average in the session, with the bullish combination trade accounting for two-thirds of the total.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: FFIV

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