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Akamai Technologies Inc. (AKAM)

Aug 24 2008

Akamai Technologies Inc. (AKAM)

Strong Call option buying in Akamai Technologies (AKAM) on Friday is a positive sign for the company. Most of the buying was in the front month of September with some additional buying in the October Calls noted.

Unusual Call Volume

            Akamai Technologies rallied on Friday along with the market 4.78% while the Call options for September saw unusual volume for the strike prices of 25 and 30, both above the current share price. These options have until the 19th of September to pay out. The volume at the 25 Strike price was 24,000 contracts while the volume at the 30 Strike price was 12,200 contracts. October also looked attractive to some investors with 5,400 contracts at 25 and 2,300 contracts at 30 traded. All the volume numbers are much greater than normal trading levels.


            Akamai provides services to accelerate the delivery of content over the Internet. The company is expected to grow earnings 17.6% this current quarter and 25% for the year compared to last year. Expectations have fallen recently on the earnings front but overall the numbers remain decent. Revenue growth for the current quarter is around 21% year over year, with 24.3% revenue growth expected for the yearly totals. The trailing P/E ratio for the stock is at 33.01 which compared to the earnings is not cheap but about par.

The Trade

            The stock was beaten down at the beginning of August and has made a nice bottom formation starting to break out of a pattern to the upside. You could go long Akamai for a period of time based on the chart breakout and the unusual options activity.

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