Bull looks for reversal in Rackspace

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Rackspace has lost more than half its market value this year, but one trader apparently believes that the stock is due for a bounce.

More than 2,000 July 35 calls traded in a strong buying pattern this morning, led by a print of 1,430 that went for $2.20. This is clearly new activity, as the volume was well above the strike's open interest of just 261 contracts before the session began.

RAX is up 1.15 percent to $35.96 in morning trading, advancing along with other cloud-computing names despite the broader market downturn. The stock hit an all-time high of $81.36 in January but gapped down after two quarterly reports since then.

Today's long calls , which lock in the purchase price for the stock, will track the share price closely because they are in the money . They are looking for RAX to gain roughly 3.5 percent by mid-July but will rapidly lose value if the stock doesn't rise. (See our Education section)

Calls outnumber puts by 6 to 1 so far today.

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