Bullish investors are looking to shout, “Yahoo!” for Yahoo! (NASDAQ: YHOO, Stock Forum) if they collect profits from the rally they expect to see throughout earnings season.
Looking at the Aug. 15 calls, at least one investor expressed bullishness and boosted volume in these near-the-money options. The investor bought them 20,000 times for $1.10 per contract with the stock at $14.65. The Aug. 15 calls are currently up five cents and are home to open interest of just 207, suggesting that yesterday's volume will translate as new positions today.
Shares of the second-most visited Web site (according to Web information company Alexa) have rallied 65% since reaching a 52-week low of $8.95 on Nov. 20, but they are nearly 70% off their 52-week high of $24.64, which YHOO reached on July 8, 2008.
Normal daily options volume for YHOO is approximately 35,000 contracts compared to the 45,000 contracts that changed hands yesterday. The bulk of that volume changed hands on the Aug. 15 calls.
YHOO did not announce significant news, but it is interesting that at least one investor could be betting that these shares will rally higher than $15 in the August expiration month; the investor needs YHOO shares to expire higher than $16.10 to make money. YHOO stock dropped 23 cents to close at $14.68 yesterday.
Investors should not run out and buy YHOO shares just because of heavy call buying activity in the name. I recently wrote about some heavy put buying activity in technology companies Cisco Systems (NASDAQ: CSCO, Stock Forum) and Texas Instruments (NYSE: TXN, Stock Forum), but at least one investor is playing contrary to this bearish trend in the technology sector.
Meet Jud Pyle live in Las Vegas at the Forex & Options Expo. Click here to find out more.
Jud Pyle is the Chief Investment Strategist for Options News Network (www.ONN.tv) and the portfolio manager of TheStreet.com Options Alerts. Options Alerts “Click here for a free trial for Options Alerts.”
Read more Stockhouse articles by Jud Pyle