STEC – STEC, Inc. – An upgrade of the provider of enterprise-class Flash solid-state drives to ‘buy’ from ‘hold’ at ThinkEquity LLC this morning catalyzed a 7.00% rally in the price of STEC’s shares to an intraday high of $15.78. But, it seems the sharp rally was short-lived with the price of the underlying shares currently up just 0.40% to stand at $14.81 as of 12:35 pm (ET). Investors expecting the increase in share price to last earlier purchased July contract call options to position for continued appreciation ahead of expiration on Friday. Bullish players picked up 1,100 calls at the July $15 strike for an average premium of $0.68 apiece, thus positioning buyers to profit should STEC’s shares trade above $15.68 by July expiration day. Optimism spread to the higher July $16 strike where 1,100 calls were purchased at an average premium of $0.23 each. Call buyers at this strike price make money if STEC’s shares surge 9.6% over the current price of $14.81 to trade above the effective breakeven point to the upside at $16.23 by expiration day. Options implied volatility on the stock jumped 11.5% to 72.20% just before 12:45 pm (ET).
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.
Visit: Interactive Brokers