Shares of cloud communications software company Kaleyra (KLR) have been rangebound over the past few months. However, one trader sees the possibility for shares to move higher in the next few months.
That’s based on the May $12.50 calls. With 172 days until expiration, over 7,990 contracts traded compared to a prior open interest of 329, for a 24-fold rise in volume. The buyer of the calls paid $1.180 for the trade.
With shares last trading just over $11, the stock would need to rally about 14 percent for the option to move in-the-money. That would also put the company well under the stock’s 52-week high just under $21 per share.
Given the stock’s volatility in the past year, shares have underperformed the market by about 50 percent, with a total gain of about 18 percent in the past year. The company is still unprofitable, but revenue has jumped nearly 120 percent in the past year.
Action to take: The company is growing quickly but shares have been trading sideways for a while, and could be setting up for a move higher. As an early-stage growth company, shares don’t pay a dividend at present.
Traders may like the May calls, which have nearly six months to play out. Given the stock’s volatility, a pop higher could easily lead to triple-digit returns in the shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.