Flex Options Hot After Goldman Sachs Upgrade

One trader may have initiated a long strangle in the January 2020 series

Flex Ltd (NASDAQ:FLEX) is seeing accelerated options trading today, as the stock moves higher on a new bull note. With about an hour left in the session, around 7,300 calls and 6,750 puts have changed hands on FLEX, three times what's typically seen at this point, and volume pacing in the elevated 98th annual percentile.

Most of the action has centered at the January 2020 8-strike put and 10-strike call, where it looks like one trader may have initiated a long strangle for an initial net debit of $1.62 per pair of contracts, or $405,000 (2,500 spreads * net debit * 100 shares per contract). The speculator will make money on a breakout above $11.62 (call strike plus net debit) or a plunge below $6.38 (put strike less net debit) by January options expiration.

Widening the sentiment scope, speculators have targeted long calls over puts at a quicker-than-usual clip in Flex's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 7.66 ranks in the 73rd annual percentile.

At last check, FLEX stock was seen trading up 3% at $9.63, after Goldman Sachs upgraded the electronics manufacturing name to "buy" from "neutral." The shares are running out of steam near $9.85, though, which coincides with their 20-day and 120-day trendlines, as well as a 50% Fibonacci retracement of their late-December low at $7.16 to their May 1 high at $12.54.