Juniper bulls see breakout in 2014

David Russell (
December 27, 2013

Tech has been coming back to life, and the bulls think Juniper Networks is ready to break out.

optionMONSTER's Heat Seeker monitoring system has shown unusual call activity in the provider of networking equipment during the last two sessions. Yesterday, they bought the July 21 calls for $2.85, and today they're amassing the April 22s in size for $1.92. More than 5,000 have traded so far against previous open interest of 3,591 contracts.

Long calls lock in the price where a stock can be purchased, letting investors cheaply position for a rally. The strategy makes sense in JNPR, which has been fighting long-term resistance around $22 all month. This way, they can bet on a breakout, but also have much less capital tied up compared with owning shares. (See our Education section for more on managing risk with options.)

JNPR is up 0.73 percent to $22.07 in afternoon trading. While its 12 percent year-to-date gain has lagged the S&P 500, most of the move has occurred in the last month. That matches a similar trend in the technology space as investor sentiment shifts in favor of the sector as a growth pick for 2014 and away from consumer-discretionary names, as seen on our researchLAB market scanner.

Total option volume in JNPR is twice the daily average so far today, with calls outnumbering puts by a bullish 9-to-1 ratio.

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