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
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
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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.