Infinera trade plays for more upside

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Infinera is consolidating after a December rally, and one trader sees more upside up next month.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 4,900 February 11 calls for $0.50. A matching number of January 10 calls was sold at the same time for $0.45 against existing open interest, indicating that a position was rolled from January to February.

INFN The optical-networking company fell 1.73 percent yesterday to $10.22. The shares have been on a wild ride in the last year, more than doubling between June and September, then cratering on Oct. 19 after a weak outlook and a Citi downgrade. INFN held its ground at $8 throughout November and started rallying in December.

Today's call roll suggests it still has further to run because it provided the investor with an additional month of upside exposure for a net cost of $0.05. The trader was willing to accept a higher break-even price of $11 versus $10, which reflects a belief that INFN will rally more than $1 between the January and February expirations.

The transaction pushed overall option volume in INFN to 14 times greater than average, with calls accounting for a bullish 99 percent of the activity.

The next earnings release is scheduled for after the bell on Jan. 27.

(Chart courtesy of tradeMONSTER)



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.

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This article appears in: Investing , Options

Referenced Stocks: INFN

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