Palo Alto Networks has refused to break, and now the options are turning bullish on the name.
optionMONSTER's Heat Seeker monitoring system detected the purchase of 3,000 December 47.50 calls for $2.95 and the sale of an equal number of December 57.50 calls for $0.65. Volume was more than 17 times the previous open interest at each strike, indicating that new positions were initiated.
The trader now stands to capture a move between $47.50 and $57.50, collecting $10 if it the network-security stock closes at or above the top of that range on expiration. He or she paid $2.30 to place the bet, implying a potential profit of 335 percent. (See our Education section for more on the strategy, which is known as a bullish call spread .)
PANW is down 1.21 percent to $45.12 in afternoon trading and has lost 16 percent of its value so far this year--badly lagging the S&P 500's 18 percent gain in the same period. But the stock has managed to hold above $43 recently and has actually outperformed the broader market in the last three months.
The last quarterly report on Sept. 9 gave the bulls some reason for hope because revenue beat estimates and profit was in line with expectations. The last report in May missed forecasts.
Our scanners also showed the purchase of some 2,000 November 40 puts as other investors braced for potential downside.
Overall option volume in PANW is more than 5 times greater than average in the stock so far today, according to the Heat Seeker. Calls account for almost one-quarter of the total.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.