STEC – STEC, Inc. – Call options on the global provider of enterprise-class Flash solid-state drives are in high demand today amid rumors personal-computer maker, Dell, may be interesting in making a bid for the company. STEC’s shares increased as much as 5.1% earlier to attain an intraday high of $12.18 before cooling slightly in afternoon trading to stand 2.00% higher on the day at $11.82 as of 1:10 pm ET. Investors hoping to see STEC extend gains ahead of September expiration picked up approximately 3,000 calls at the September $12 strike for an average premium of $0.35 each. Call buyers at this strike make money if shares rally 4.5% over the current price of $11.82 to surpass the average breakeven point to the upside at $12.35 by expiration day next Friday. Bullishness spread to the September $13 strike where traders purchased some 1,500 calls at an average premium of $0.18 a-pop. Investors long the calls are prepared to profit should STEC’s shares jump 11.5% to trade above the average breakeven price of $13.18 by September expiration. The overall reading of options implied volatility on the SSD maker stands 15.6% higher as of 1:15 pm ET to arrive at 62.42%.
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.
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