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Workday bulls try to clock more gains

David Russell (david.russell@optionmonster.com)

Workday has exploded higher since going public late last year, and the bulls are betting on even more upside in the business-software company.

optionMONSTER's Heat Seeker monitoring program detected the purchase of about 3,000 June 65 calls in volume that was more than 10 times higher than the strike's previous open interest of just 284 contracts. Premiums rose from $3.10 to $3.30 as the trades crossed, reflecting the strong buying interest.

The traders have locked in the right to buy shares in Workday for $65 through the end of the spring, no matter how high they might climb during that period. That will result in significant upside leverage if the shares rally but will risk much less capital than buying shares outright. (See our Education section for more on how options can be used to limit potential losses.)

WDAY rose 2.83 percent to $61.76 on Friday. The company went public for $28 a share in October and quickly doubled in price. Shares then consolidated above $50 and rallied to a new high last month before finding support at previous resistance levels. That could be leading some chart watchers to think that more gains are imminent.

The company's next earnings report is scheduled for May 23, so those June contracts will make money if it rallies on the numbers. Total option volume in the name was triple its daily average on Friday, with calls outnumbering puts by about 4 to 1.

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