SAIC fell sharply after reporting weak earnings and lowering guidance last week, but one large trader is betting that the technology company will recover by early next year.
optionMONSTER's Heat Seeker system detected the purchase of 6,000 January 16 calls yesterday, led by a print of 5,593 that went for $0.30. This is clearly fresh buying, as open interest in the strike was just 220 contracts before the trade appeared.
These long calls lock in the price where traders can purchase the stock through mid-January no matter how far it might rise. They could be sold earlier if premiums gain with a rally before then but will expire worthless if shares remain below $16. (See our Education section)
SAIC was up 0.5 percent yesterday to close at $14.44. The outsourcing company, which provides technology services to the government and military agencies, has been trading at current levels since gapping below its 50- and 100-day moving averages with its quarterly results last Wednesday.
Total option volume in the name topped 11,200 contracts yesterday, 15 times its daily average for the last month. Only 139 puts changed hands in the session, reflecting the session's bullish sentiment.
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