Workday has exploded higher since going public late last year,
and the bulls are betting on even more upside in the
optionMONSTER's Heat Seeker monitoring program detected the
purchase of about 3,000 June 65 calls in volume that was more than
10 times higher than the strike's previous open interest of just
284 contracts. Premiums rose from $3.10 to $3.30 as the trades
crossed, reflecting the strong buying interest.
The traders have
locked in the right to buy shares
in Workday for $65 through the end of the spring, no matter how
high they might climb during that period. That will result in
significant upside leverage if the shares rally but will risk much
less capital than buying shares outright. (See our
section for more on how options can be used to limit potential
WDAY rose 2.83 percent to $61.76 on Friday. The company went public
for $28 a share in October and quickly doubled in price. Shares
then consolidated above $50 and rallied to a new high last month
before finding support at previous resistance levels. That could be
leading some chart watchers to think that more gains are imminent.
The company's next earnings report is scheduled for May 23, so
those June contracts will make money if it rallies on the numbers.
Total option volume in the name was triple its daily average on
Friday, with calls outnumbering puts by about 4 to 1.
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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