Markets

Bulls back online with Check Point

The bulls are coming back to Check Point Software Technologies, which has enjoyed one of the steadiest uptrends in the market.

The maker of Internet-security systems began its rally even before the dust settled from the 2008 mortgage crisis. After an initial crash in October 2008, it made consistently higher lows while the S&P 500 continued to fall. It spent about two months in late 2009 pushing against a major long-term resistance level, and has been unstoppable ever since.

CHKP hit a 10-year high of $61.46 last month, and then pulled back along with the rest of the market. Shares rose 4.39 percent to $53.05 yesterday as investors returned to the name.

The options activity was skewed in favor of calls by a 10-to-1 ratio, which is highly bullish. There was heavy buying in the October 50 contracts for $4.60, the January 50s for $6.50 and the October 52.50s for $3.20. More than 2,000 traded in each.

It's noteworthy that the investors went in the money. While the strategy costs more, it reflects a strong desire to own the stock. In-the-money calls provide greater leverage to the upside and will result in them buying shares at expiration even if CHKP doesn't rally. See our Education Section for more.

The company's last earnings report on July 18 beat forecasts on the top and bottom lines. Management also raised full-ear guidance.

Overall options volume was almost 6 times greater than average yesterday.

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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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