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Fortinet trader targets big gains

David Russell (david.russell@optionmonster.com)

Someone is looking for a huge move from Fortinet.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 1,900 February 23 calls for $0.55 and the sale of 1,900 February 26 calls for an average premium of $0.175. These are clearly new positions, as there was barely any open interest in either strike before the trades appeared.

This bullish call spread cost just $0.375 to open and will expand to $3 if the FTNT closes at $26 or higher at expiration 6-1/2 weeks from now. That would represent profit of 700 percent. (See our Education section)

FTNT rose 0.05 percent to $19.84 yesterday. The provider of network-security products gapped lower on Nov. 29 after its chief financial officer left the company, only to bounce at long-term support around $16.50. The stock is now back near its 200-day moving average but hasn't seen $26 since September 2012, so yesterday's call spread is clearly positioned for a major rally.

The trader may expect a strong earnings release later this month to trigger the move. The last quarterly report in October beat estimates.

Total option volume in the name was triple the daily average for the last month, with calls outnumbering puts by 6 to 1.

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