VeriSign Battles to Climb Higher Despite Legal Worries

by David Russell

VeriSign (VRSN) has been battling its way higher despite legal worries, and now one trader is placing a big upside bet.

optionMONSTER's Heat Seeker tracking system detected the purchase of 25,000 December 25 calls at an average premium of $0.875. Volume was more than 15 times existing open interest in the strike.

VRSN is down 0.66 percent to $22.30 in Tuesday morning trading. The stock has climbed 21 percent in the last month and is approaching a gap lower that occurred on June 8 when a federal appeals court reinstated an antitrust lawsuit against the keeper of Internet addresses.

The stock, which was favorably mentioned last weekend by Barron's, needs to climb 16 percent by December expiration for the calls purchased Tuesday to turn a profit.

Tuesday's call buyer may be placing an outright bullish wager on the stock or hedging a short position in the name. Short interest represented an elevated 7.9 percent of the float on Aug. 26.

Overall options volume in VRSN was five times average Tuesday. Call activity exceeded puts by 45 to 1.

(Chart courtesy of tradeMONSTER)