Tonight I have a new alert which is for RHT December 50x Calls. These calls are trading at 1.30 (1.25 x 1.35).
This afternoon a trader purchased $540,000 worth of calls on the December $48 strike. Just minutes before that there were large blocks of trades on the 52.50x and 55x calls which was a spread. About 30 minutes later there was a bull spread made on the January calls with the 47x and 50x calls. 2,500 contracts were purchased at $3.30 for $990,000 while the same amount of contracts was sold on the 50x calls at 1.87.
Two very large trades were made on RHT today and they both are bullish bets. Now going over the chart it seems like it could be putting in a bottom here. RHT is down over 20% in the past 10 weeks putting it in bearish territory. However it bounced off key support levels on the weekly and daily charts...
Here are the weekly and daily charts for Red Hat, as you can see the last couple of times it tested the 100 day moving average on the weekly it bounced almost immediately and bounced hard. It also bounced off the 38.2 Fib Arc support this week and is now trying to climb back above the 100 ma which I believe it will do. On the daily it has completed a full retracement and is oversold.
In my opinion we'll see Red Hat climb back above $48 this week and continue higher over the next couple of weeks towards $50. With CSCO beating on earnings tonight techs may get a decent boost tomorrow, although I am still looking for a bit more downside in the markets before a good bounce.