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Trader looks for rebound in VMware

Mike Yamamoto (mike.yamamoto@optionmonster.com)

VMware has faced mounting pressure over competitive concerns recently, but one trader is betting on a comeback by the cloud-computing company.

optionMONSTER's Heat Seeker system detected the purchase of 1,500 October 72.50 calls for $3.50 at the same second on Friday. This is clearly a new position, as the strike's open interest was just 226 contracts before the trade appeared.

VMW slipped 0.98 percent to $66.99 on Friday after reaching a two-year low of $64.86 at the start of the week amid concerns over increased competition from a new alliance between Microsoft and Oracle. The stock peaked above $79 in mid-May, a resistance level going back to March, and has been trending lower since.

Friday's long calls , which lock in the purchase price for the stock, are looking for VMW to rally back above $76 by mid-October. These options could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if they remain below the $72.50 strike price. (See our Education section)

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