NetApp is pulling back after hitting a nine-year high, but traders are looking for another push to the upside.
OptionMonster's tracking systemsdetected a flood of call buying in the data-center stock yesterday as investors wagered on a rebound over the next six weeks. The September 42 calls were the most active, trading 5,194 times against open interest of 1,299 contracts, with premiums varying from about $1.35 to about $1.95 as the shares fluctuated during the session.
Buyers also snapped up calls at the August 42, September 39, September 41, and August 41 calls. Volume was more than double open interest across the board.
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NetApp's stock fell 2.84 percent to $41.69 yesterday but is up about 300 percent from its late-2008 lows. It has surged on a boom in cloud computing as enterprises migrate huge amounts of data from in-house servers to the web-based systems.
One noteworthy observation about yesterday's option activity was that almost all of it was in the money or at the money. This suggests that traders expect only a modest appreciation toward the recent high of $44.89 established earlier this month.
They may think that the stock will climb into the release of fiscal first-quarter earnings after the bell on Aug. 18. Management issued bullish guidance the two last times it issued quarterly results.
Overall options volume in the name was 10 times greater than average yesterday, with calls accounting for a bullish 69 percent of activity.
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David Russell is a reporter and writer for OptionMonster.