One investor is keeping the faith in Citrix Systems as quarterly earnings approach.
optionMONSTER's Heat Seeker monitoring system detected the purchase of 1,850 December 67.50 calls for $4.18 and the sale of an equal number of December 72.50 calls for $2.08, resulting in a cost of $2.10. Volume was below open interest in the 72.50s, so there are two possible explanations for the trade.
One is that both halves of the transaction were opened, in which was it was a bullish call spread , with the potential to deliver profit of 138 percent if the software stock closes at or above $72.50 on expiration.
Alternatively, he or she might have previously bought the higher-strike contracts--only to see them lose value as the stock retreated in the last two weeks. Adjusting down to the 67.50s increases their delta and will let them profit more immediately from a rally. (See our Education section for more on how to manage risk with options.)
CTXS is down 1.06 percent to $66.89 in afternoon trading and has been shuffling in a range for more than two years. Shares rallied in late July after results beat expectations and management provided a strong outlook.
Total option volume is triple the daily average so far, according to the Heat Seeker. Calls outnumber puts by a bullish 16-to-1 ratio.
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