Cyberonics shot higher on strong quarterly results and guidance last week, and traders apparently believe that the positive momentum will lead to big gains this year.
optionMONSTER's Heat Seeker system shows that 2,776 January 65 calls traded in a strong buying pattern in less than 2 minutes on Friday, led by a print of 2,605 that went for $2.30. Open interest in the strike was a mere 10 contracts before the trade appeared, indicating that this is new activity.
These long calls , which lock in the price where the stock can be purchased, are looking for CYBX to rise above $67.30 by early next year--a gain of roughly 29 percent from Friday's close. The options could be sold earlier at a profit if premiums rise with a rally before mid-January, but they will expire worthless if shares remain below the $65 strike price. (See our Education section)
CYBX gained 1.03 percent to close at $52.16 on Friday. The company, which makes implantable medical devices, gapped up from below $48 on Wednesday after beating quarterly earnings and revenues estimates while issuing a forecast for the current fiscal year that was also above expectations.
Total option volume was 3,049 contracts on Friday, 13 times its daily average for the last month. Calls outnumbered puts by a bullish 21-to-1 ratio.
The company is scheduled to present at the William Blair & Company 33rd Annual Growth Stock Conference on Tuesday and at the Goldman Sachs 34th Annual Global Healthcare Conference on Wednesday.
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