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Red Hat call buyers seek quick pop

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Short-term traders are looking for a pop in cloud-computing company Red Hat by the end of next week.

optionMONSTER's Heat Seeker system shows that 1,500 August 52.50 calls were purchased yesterday for $0.60 and $0.65. The volume was twice as high as the strike's previous open interest of 775 contracts, indicating that this is fresh buying.

These long calls lock in the price where traders can purchase the stock for the next eight sessions no matter how far it might rise. But if RHT remains below $52.50 in that time, those options could expire worthless. (See our Education section)

RHT fell 1.11 percent yesterday to close at $51.66. The stock spent most of June bottoming at the $46 level and then began trending higher, breaking above its 200-day moving average in late July.

Red Hat will present at the Pacific Crest Global Technology Leadership Forum on Aug. 13 and at the Oppenheimer Technology, Internet & Communications Conference on Aug. 14. The software company has not yet announced the schedule for its next quarterly results, but last year's calendar suggests that they will come out in late September.

Overall calls in the name outnumbered puts by 9 to 1 yesterday.

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