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Riverbed options Popping

|Includes: Riverbed Technology, Inc. (RVBD)

Pete Najarian at Optionsmonster thinks this is an earnings options play. I'm not so sure about that.

  • Riverbed Technology(RVBD Quote) options are drawing heavy call activity ahead of its earnings report next week.

The evidence just doesn't suggest the earnings play. For the May 20s to be profitable, it'd take one huge earnings run. Maybe the 17.50s as that'd only require a 30% move. More likely is that somebody is placing a bet on the CSCO rumor of a buyout. I'm not really in favor of a deal at these levels as I'd rather ride RVBD back to old highs in the 50s if market willing then cash out at 20 with the economy just now turning. Mabye CSCO has come knocking with a rich premium in the 22-25 range. Otherwise, I don't see a deal being tempting enough to management so this option play seems off base. Other then that, we're really just talking about RVBD making the 20s based on the market recovery and that just doesn't seem likely either after a big run. I'd be all over a June/July 20s option, but May 15th needs a CSCO buyout.

Is the rumor actually real this time? Hmm.... the options market sure thinks so.