(The following is an example of notable trading cited on optionMONSTER's InsideOptions Pro service yesterday.)
Adobe Systems has been strong since it reported earnings last week, and traders are looking for shares to reach new highs.
optionMONSTER's Heat Seeker system shows that 15,000 October 90 calls were bought in one print for $0.85 yesterday. That volume far outstripped the strike's open interest of 1,715 contracts, which means that new positions were established.
These long calls lock in the price where the stock can be purchased through mid-October no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $90. (See our Education section)
ADBE rose 0.99 percent to $85.50 yesterday. The software maker initially dropped after revenues and outlook were below expectations Thursday evening, but shares quickly turned higher thanks to bullish analyst notes from firms including Deutsche Bank, Jefferies, and Morgan Stanley.
Yesterday's option activity was noteworthy because it targeted a strike above the software company's all-time high of $87.25.
Total volume option volume in ADBE yesterday was 6 times its daily average for the last month. Overall calls outnumbered puts by more than 10 to 1, a reflection of the session's bullish sentiment.
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