Sonic Solutions has been cratering after a bad earnings report, but one investor is getting long on the digital media company.
optionMONSTER's Heat Seeker tracking program detected the purchase of 2,000 May 10 calls for $1.65 and the sale of an equal number of May 15 calls for $0.25 and $0.30. Volume was more than 7 times open interest in both strikes.
The trade cost about $1.425 to implement and will earn a maximum profit of 251 percent if SNIC closes at or above $15 on expiration. It hasn't traded that high since April 2007.
The stock is rallying 5.15 percent to $9.59 in morning trading. SNIC began the session down 25 percent since Nov. 9, when the company reported a wider-than-expected loss and revenue fell more than forecast.
The news was more positive today after Canada's Cineplex Entertainment theater chain launched a movie-download service using SNIC's RoxioNow service.
The Roxio brand is one of two major businesses owned by the small-cap U.S. company. The other is DivX, which it purchased last month. Both segments focus on delivering media over the Internet.
Short interest accounted for about 45 percent of the float in SNIC, which could also drive buyers to the stock.
Overall option volume in the name is 33 times greater than average so far today, with calls accounting for all of the activity.
(Chart courtesy of tradeMONSTER)
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