VMware bulls bet rally will resume

Mike Yamamoto (mike.yamamoto@optionmonster.com)

VMware has been range-bound since spiking sharply higher with its earnings report in July, and traders are looking for another rally by early next year.

optionMONSTER's Heat Seeker system detected the purchase of 2,800 January 92.50 calls in one print for $4.10. The volume was above the strike's open interest of 1,191 contracts before the trade appeared, clearly showing that this is a new position.

These long calls , which lock in the purchase price for the stock, are looking for VMW to rally above $96.60 by mid-January--an increase of more than 11 percent from current levels. The options could be sold earlier if premiums gain with a rally before then, but the contracts could also expire worthless if shares remain below the $92.50 strike price. (See our Education section)

VMW is up 0.71 percent to $85.23 this afternoon. The cloud-computing company gapped up from the $71 level after releasing strong quarterly results and raising guidance on July 23, but shares have been trading mostly sideways since then with resistance around $88.

Total option volume is already more than 40 percent higher than its full-session average. Overall calls in the name are outnumbering puts by a bullish 13-to-1 ratio.

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