Traders are back from the July 4 long weekend and looking to score on some options trades. Some of the most notable options trades this morning include Fortinet Inc. (FTNT), InvenSense Inc (NYSE:INVN), and Cirrus Logic, Inc.(NASDAQ:CRUS).
Big Put Buyer Hit’s Fortinet Inc. (FTNT)
One trader is pretty certain that Fortinet Inc. (FTNT) has hit a top and expects it to drop quickly before end of August. The trader bought 3,100 of the FTNT August $25 puts for $1.30 a piece. This was an opening trade. The total investment was $403,000.
Fortinet is not far from it’s 52 week high of $25.46, and has a long way to drop to it’s 52 week low of $16.29. FTNT does look way overvalued at 104 times earnings as per financial records at google finance. It’s down 37 cents today, to $24.91.
However, Fortinet does have an analyst consensus rating of OVERWEIGHT and a price target of $26.43. Based on the current analyst ratings, and this very large unusual put buy today, we fully expect to see a major downgrade announced by one of the major firms. The other upcoming catalyst for this put buy could be an earnings leak. The company is due to announce earnings July 28, 2014.
InvenSense Inc. (INVN) Sees Bullish Call Action This Morning
One trader was seen gobbling up some July $25 and Sept $30 calls this morning in INVN. A total of 1016 Sept $30 calls have traded so far, in the 50 cent range, while the July $25 calls have traded over 900 contracts. While not huge volume it is interesting opening trades, and the stock is up $1.39 to $24.03 so far this morning.
Piper Jaffray already upped it’s rating on INVN back on June 30 with a price target of $25, so this call buying is not related to that upgrade. Other catalysts for the renewed call buying: InvenSense does report earnings on July 28, 2014. But that’s not going to help the call buyer out with their July calls as they expire on the 19th. Another option is a bigger upgrade is about to be announced by a bigger firm. This is the usual play.
Cirrus Logic (CRUS) Up Big with Big Call Buy
One smart trader bet big on a quick spike in Cirrus Logic (CRUS), buying over 1,000 of the weekly July 11 $23.50 calls, at 40 cents. CRUS is up big this morning, up $1.23 now to $24.42. There has now been a total of 2,417 of the July 11 $23.50 calls traded today as the copycat investors jump on the bandwagon with the possible insider trade.
And those 40 cent calls? They are now bidding 75 cents to an ask of 90 cents, last trading at 85 cents. A nice quick double for that initial investor, after just 2 hours. That’s a profit of over $$42,000 in two hours. The question is, do you hold on for the news or sell now for that double?