Trader Buys 11,000 Call Options in Spansion, Inc (CODE)

We love seeing repeat buying in the same calls from the “smart” money, especially after they’ve made a ton of money on their previous call buys.  That’s happening again in Spansion, Inc (CODE) this morning.

A trader has just bought 11,300  Spansion, Inc (CODE) November $30 calls a few minutes ago.  The trader paid up to 95 cents for the contracts.  That makes for a big “bet” with a transaction value of just over $1,000,000 for a little known company that provides embedded flash memory products.

Spansion, Inc (CODE) is currently trading at $23.26, up 52 cents on the day, after hitting a low of $22.52 earlier this morning. It spiked just after the call buy to $23.48.  CODE has a 52 week high of $23.48 reached today, and a low of $9.70 on the year.  Volume in trading is a little higher than average, trading 700,000 shares so far today, but volume is picking up since the call buy.  Clearly this trader is confident in Spansion, Inc (CODE) business prospects in the short term.  Maybe they “smell” an upgrade from a major firm. Or, maybe they smell an announcement that the firms chips are being used in a new phone?.  The options are still bid 90 cents, ask 95 cents, with the last at 95 cents, so if you want to jump on this already moving freight train, here’s your chance. Just keep in mind, these smart guys have been riding this train the last two weeks as the stock moved up from the $15.00 area!

spansion-CODE-logoAs we said, this is not a widely followed company, with 9 analysts currently follow Spansion, Inc (CODE).  However, the average rating on CVEO is “BUY” and the average price target is only $24.75.

The last analyst action was in July , when Needham and Co, boosted it’s price target on Spansion, Inc (CODE) to $28.00 from $22.  So it is certainly very possible that a firm like Jefferies, or Stifel Nicholaus is about to announce a big price target increase.   Also, keep in mind earnings are scheduled to be released late October, though it is very unlikely that is why this trader bought 11k calls today.

So again, this one is very interesting given the size of the bet, and if you can get it at 95 cents or less it could get interesting for you too.