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What's behind call surge in Qlik

David Russell (david.russell@optionmonster.com)

Qlik Technologies got crushed in October, and one big investor wants their money back.

optionMONSTER's Heat Seeker monitoring system detected the purchase of some 2,800 February 31 calls for about $1.50 and the sale of about 5,600 February 35s at the same time for $0.65. Volume surpassed previous open interest at each strike, indicating that a new ratio spread was initiated.

The trade cost just $0.20 and will expand to $4 if the software maker returns to $35 on expiration. Gains will erode above that level and turn to losses above $39 if the position was implemented in isolation.

The spread was likely done in conjunction with a long position in the stock. The investor probably owned QLIK before management erased one-fifth of the company's market value by issuing a weak outlook two months ago. This way, the investor can leverage a rebound to $35, earning huge leverage in the process and lowering the break-even price.

QLIK fell 0.15 percent to $26.47 yesterday. It's been trading on either side of $25 and is now back above its 50-day moving average for the first time since early October.

The stock also formed a " head and shoulders " reversal pattern around $35 before dropping, which is probably why the ratio spread is targeting that level.

Total option volume was quadruple the daily average , according to Heat Seeker. Calls outnumbered puts by a bullish 85-to-1 ratio.

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