The options got cheap in Riverbed Technology yesterday, and buyers stepped in.
optionMONSTER's Heat Seeker system showed heavy trading in the December 15 calls for $0.68. More than 6,000 were purchased against previous open interest of just 2,690 contracts, so new money was definitely put to work on the long side.
These long calls lock in the price where the stock can be purchased, giving investors cheap exposure to a rally and some nice leverage if one occurs. (See our Education section)
Riverbed, a computer-networking company that provides solutions for enhanced information-technology performance, climbed 0.61 percent to $14.82 yesterday. It reported earnings earlier this week, beating on profit but missing revenue expectations. The stock ran higher and has been holding near $15 since.
Implied volatility has really come out of the options since results came out and is now below the 30-day historical volatility . That means the options are cheap, so it makes sense to use them to get long.
More than 25,000 contracts traded overall, more than 4 times greater than average. Overall calls outpaced puts by 21,700 to 4,100, a reflection of the session's bullish sentiment.
Disclosure: I own long calls in RVBD.
(A version of this post appeared on InsideOptions Pro yesterday.)
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