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Acme Packet traders look for big jump

David Russell (david.russell@optionmonster.com)

One investor expects fireworks when Acme Packet reports earnings later this week.

optionMONSTER's Heat Seeker monitoring program detected the purchase of about 5,000 November 17 calls for $0.70 to $0.90. Volume is more than 28 times open interest at the strike, indicating that a new position was initiated.

APKT is down 2.12 percent to $15.73 in afternoon trading. The maker of telecommunications gear peaked over $80 last year, then proceeded to lose more than 80 percent of its value through this summer as business weakened.

The shares are now parked at a support level from late 2007, and short interest has climbed to 17 percent of the float. That could be encouraging traders to bet on a bounce.

But they're not alone. APKT's implied volatility has climbed to about 70 percent from 55 percent at the beginning of last month, indicating that option traders expect a big move higher or lower.

As a result, today's buyers need a rally of more than 10 percent to $17.80 before they make any money. If it climbs a smaller amount, the contracts could lose value as implied volatility drops after the news becomes public.

The company is scheduled to report quarterly results after the bell on Thursday.

Overall option volume in APKT is 6 times greater than average so far today, according to the Heat Seeker. Calls account for a bullish two-thirds of the activity.

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