Red Hat, Inc. (RHT) Activity Leads to Big Profits in Short Time

Red Hat, Inc. (RHT) is a Raleigh, North Carolina based enterprise software and technology provider. At the time of this post (1:10 PM CST), RHT is currently trading at 66.94, up 1.83% on the day. The stock is currently well within the upper portion of its 52 week trading range of 47.45-71.77, and has remained in a relatively strong uptrend since putting in the lows in late April.

Earlier this afternoon at approximately 12:00PM CST, OptionHacker detected and flagged some unusually bullish options activity in RHT as the stock broke the 66.50 level to the upside and pushed higher to test as high as 67.03. Coinciding with the outset of this breakout, a large trader came in and lifted the offer across multiple exchanges on 2,001 of the RHT Feb ’15 67.5 strike calls for 0.55. This transaction went off against an open interest of just 558 contracts in the strike, so we can surmise confidently that this was an opening transaction looking to profit from a near-term move higher in RHT, with the February monthly options expiration just nine days away on February 20th. This trader’s aggressive bet with an initial cash outlay of approximately $110,055 before commission costs appears to have paid off right away however, as this option has already traded as high as 0.85 on the session. RHT continues to look technically strong on multiple time frames, and we will be monitoring this position closely for continued upside going into next Friday’s front month.

Trade: A trader bought 2,001 RHT Feb 67.5 Calls for $0.55
Risk: $55 per 1 lot
Reward: Unlimited
Breakeven: $68.05

I bought some of these for $0.60 and have already taken profits at $0.70 and $0.80. These calls have already traded as high as $0.85 meaning this was an extremely profitable trade in the matter of only a few hours.