Big May Call Buyer Makes a Ton on Ruckus Wireless Inc (RKUS)

Ruckus Wireless Inc (RKUS) has seen higher than normal volume so far today, with the stock price following suit.  RKUS is up over 5% to $12.06.  But why is seeing increased volume and why is it up today?

There’s a lot going on for this little company, and several reasons for it’s rise from below $9 in May to it’s current $12+.  Today’s lift is all about the announcement of a deal with La Quinta Inn and Suites to use their smart wifi in the motel chain.  There are 830 La Quinta properties in North America so this is a nice deal for RKUS.

Next, RKUS was upgraded by several analysts this past week.  This is creating some momentum for the stock price the past weeks.

Interesting to note, in hindsight, there was some unusual purchases of call options beginning back on May 15.  To be specific, one buyer bet the farm with an opening purchase of 2200+ Jun $10 calls for 35 cents!  I’m sure you can do the math on the investment returns on that little bet.  In case you can’t, that little $77,000 bet was worth $374,000 as of last Friday.  Do you think a little birdie told this investor about the La Quinta deal before it was announced to the public?

In addition to that purchase, another buyer bought 2700 Jan $15 calls in RKUS on May 23.  They paid 60 cents for those longer term options at the higher strike.  There’s plenty of time left in those calls, but the buyer is already up about 33% as of today.

Our bet is that there is more good news to come from Ruckus Wireless (RKUS) soon as lastest wiseguy call buyer is looking to get paid a lot more than 33% on this latest bet.

Here’s the one day chart on RKUS: