Call buyers want to rock with Pandora

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Pandora Media has been drifting sideways for the last two months, but yesterday buyers decided to tune in.

The Heat Seeker detected the purchase of about 7,800 August 12 calls for $0.50 and $0.55. Open interest in the strike at the beginning of the day was 1,352 contracts, so these are new positions.

These long calls lock in the price investors must pay to buy stock in the online music company, so they can provide substantial leverage if Pandora rallies. If it doesn't, the options will expire worthless. (See our Education section)

P, which has been drifting sideways for the last two months, rose 4.22 percent to $10.37 yesterday. Short interest is elevated at more than one-third of the float.

The company's last earnings report in April beat expectations. The next release date hasn't been announced yet, but it will probably be later this month before the August calls expire.

The September 14 calls were also bought for $0.20, but volume was below previous open interest, so they could have been opening or closing transactions.

Overall option volume was 11 times greater than average in the session, with calls outnumbering puts by more than 5 to 1.

(A version of this post appeared on InsideOptions Pro yesterday.)

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

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This article appears in: Investing , Options

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