We wrote about MagicJack Vocaltec LTD (CALL) on friday after they reported very strong earnings. We were able to make some nice profits on the 22.50 calls as the stock ramped to $23.20 on strong volume. Since then, the stock has faded to $20 on low volume, as folks locked in profits and those who think the MagicJack story is over, shorted the stock.
The stock has filled the gap from the move higher on earnings, and held at $20 this morning, where it has found support three others times in October. After melting higher to $20.60 at 10:54 am, the stock spiked .50 to $21.14 in a matter of minutes as a trader made a large bet for upside on the stock into November buying 1000 Nov 20 calls at $1.90 equalling $190k, while also selling 662 Nov 22.50 puts at $2.10 getting $139,000.
With a short interest of 28% and a minuscule float of 12 million shares, it seems odd that someone would use the options as a vehicle to profit on upside here, but maybe they think it's going higher then $25 before November calls expire like we do? I guess great minds think alike.
We currently hold Nov $25 calls.