Trade alert on Akamai (AKAM) call roll


Akamai Technologies Inc. (NASDAQ: AKAM ) earnings are just one day away, and it looks like at least one investor could be calling for the stock to experience limited downside during the near term. The August 46 calls and the September 50 calls were active during the morning session thanks to an investor who could have rolled a short call position out and up.

At 9:53 a.m. EDT, 4,636 out-of-the-money (OTM) August 46 calls changed hands for $2.05 per contract. Simultaneously, 4,173 September 50 calls crossed the tape for $1.20 per contract. The August 46 calls are home to current open interest of 7,600 contracts compared to current open interest of 242 contracts in the September 50 calls. The earlier dated calls traded for a price that was higher than the ask at the time of the trade while the September calls crossed for a price that was one cent higher than the bid price.

This options action suggests the investor bought the 46-strike calls to close and sold to open the 50-strike calls for a net debit of 85 cents per roll. The investor who rolled out this moderately bearish call position will make money if AKAM shares are trading lower than $50.85 at September options expiration, meaning investors will make money if the stock does not rally more than 13% during the next couple of months.

Trades with inconsistent volumes can be graphed out to clearly illustrate the risk/reward dynamics of this spread and other stock and option trades. Open a free virtual trading account today to gain access to professional-level trading tools to visualize profits and losses.

AKAM shares dropped 61 cents, or more than 1%, to $44.76 during morning trading. The company is due to announce earnings figures on July 28 after the market closes. Analysts estimate earnings of 34 cents per share.

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.

This article appears in: Investing , Options

Referenced Stocks: AKAM

Karla Yeh

Karla Yeh

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