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Complex upside trade in Fusion-IO

David Russell (david.russell@optionmonster.com)

Fusion-IO has been fighting back from long-term lows, and one investor is crafting an unusual upside strategy.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 3,000 June 13 calls for $0.80. He or she also sold 3,000 March 10 puts for $0.40 and 3,000 January 2016 20 calls for $1.20. That translates into a cost of $0.80.

The complex three-way strategy was probably done in conjunction with a long position in the maker of networking chips. This way, the investor will leverage a rally to $20 in the next two years, while also agreeing to buy more stock on a drop to $10. (See our Education section for more on what it means to sell calls and puts.)

FIO is up 1.82 percent to $11.20 in morning trading. It made an all-time low of $8.32 on Jan. 13, rallied into the release of quarterly results on Jan. 22 and then popped after those numbers beat expectations.

Today's trade accounts for almost all the option volume in the name so far today and pushed total volume slightly above average, according to the Heat Seeker.

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