Fusion-IO trade bets on bounce

Mike Yamamoto (mike.yamamoto@optionmonster.com)
June 9, 2014

A trader is betting that Fusion-IO will rebound by the end of summer.

optionMONSTER's tracking systems detected the purchase of 3,000 September 10 calls for about $0.47. At the same time, 3,000 September 7 puts were sold mostly for $0.43 in volume well above the previous open interest at that strike, indicating new positioning.

This combination trade is highly bullish because a rally would boost the price of the long calls while reducing the value of the puts that were sold . But the calls would expire worthless if shares remain below $10 through mid-September, and the trader would be on the hook to buy shares if they fall below $7. (See our Education section)

FIO rose 2.2 percent to $8.36 on Friday. The data-storage company was above $12 in mid-March but fell to the $8 level a month ago, which has been holding as support in an extremely tight range. The stock last traded above $10 in mid-April and has never been below $7.

Total option volume in the name topped 11,500 contracts on Friday, more than 4 times its daily average for the last month.

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