F5 Options Volume: Trend Reversal, Or Roll-Outs? (FFIV)

F5 Networks, Inc. (NASDAQ: FFIV) was last week’s ‘sobering-up stock’ when it comes to high-priced tech stocks that have run substantially over the last year.  The revenues were almost there and the guidance was not too far under the mark, but the stock was priced for perfection.  You already know that news, but what we want to note is that despite another 3.6% drop to $106.00 today is that options roll date is showing a far different bias than what the stock is telling you on the surface.

As of 2:30 PM EST, we have seen over 18,000 of the nearest options contracts trade in the CALLS ($100 to $120 strikes) versus only about 6,500 of the nearest PUTS ($110 down to $90 strikes).

What is interesting on the CALL options is that the $115 and $120 CALLS for February have both traded over 7,000 contracts versus an open interest of 3,022 in the $115 strike and 3,366 of the $120 strikes.

This is much more likely tied to traders putting on new FEB-2011 options bets rather than any major reverse indicator due to last Friday having been options expiration date.  Many option rolls will have taken place late Friday, but there are always more which take place the week after options expiration date.  Still, a bet is a bet and seeing twice the open interest trade will catch many investors’ eyes as unusual options volume.

The drop of 3.6% to $106.00 is on almost double the normal volume as there have been some 5.8 million shares traded.

JON C. OGG