Cavium Networks has been trading above a key level, and
yesterday the bulls stepped in.
optionMONSTER's Heat Seeker scanning system detected the purchase
of 1,700 March 37 calls for $1.95. There was no open interest in
the strike at the beginning of the day, which indicates that new
positions were initiated.
lock in the price where investors can buy shares in the maker of
networking chips. These options will generate some nice leverage in
the event of a rally but will expire worthless if the stock doesn't
move. (See our
CAVM rose 4.73 percent to $34.10 yesterday. It more than quadrupled
between early 2009 and early 2011 but then rolled over and lost
half its value.
Shares have been rebounding since the summer after some strong
earnings reports and have stayed above their 200-day moving
average. That could make some traders believe that the long-term
uptrend will continue.
Volume of 3,600 contracts was more than 20 times greater than
average in the session, according to optionMONSTER's data systems.
Calls accounted for more than four-fifths of the total.
(A version of this post appeared on
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