Trader sees top at Compuware highs


Shutterstock photo

Compuware is stalling at a long-term resistance level, and one investor is apparently throwing in the towel.

CPWR optionMONSTER's tracking programs detected the sale of 5,200 February 10 calls for $0.80 against open interest of 2,519 contracts. Total option volume in the software stock is 36 times greater than average so far in the session.

CPWR is down 1.54 percent to $10.26 in late morning trading, one day after hitting a 14-month high of $10.48. The company's earnings and revenue beat forecasts the last time it issued results on Oct. 22. The stock exploded higher on that news and has been slowly grinding upward since.

Shares are now pushing against the same level where they traded immediately before the late-2008 market crash. Some chart watchers may expect resistance in this price area.

Today's option trade was probably the work of an investor who owns CPWR shares and expects them to pull back. Writing calls obligates the trader to sell the stock at $10 if it closes above that level on expiration. (See our Education section)

Including the premium earned, the transaction effectively locked in an exit price of $10.80 on the stock.

(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 Nasdaq, Inc.

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

This article appears in: Investing , Options

More from optionMONSTER




Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by