Volume Spike: Red Hat Options (RHT)

Posted in Options 
October 14th, 2008

Red Hat Inc. (NYSE: RHT) has seen a very unusual amount of activity in its stock options today.  We have witnessed some 36,208 contracts having traded in the JAN-2009 $22.50 CALLS alone.  Some of these could be sells as the open interest is more than 43,000 contracts, but that is a very unusual move in options trading volume.  We have not seen any correlation at all in the PUT options.  In fact, the trading in this $22.50 strike price for JAN-2009 expiration is literally an exponential surge of all of the other options traded.

We don’t want to create any speculation based on what a certain CEO of a giant enterprise software player said recently about looking at possibly taking advantage of bargains.  But when we see volume of this size it is does create the need to remember all of the events and possibilities of the past.

This also comes on a day where shares are down roughly 7% at $13.73.  The company this morning amended its prior share buyback and convertible plan to allow for an increase of $85 million of the debentures that may be purchased.

Jon C. Ogg
October 14, 2008

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