What’s Up With Check Point Software Technologies?

Stock option volume for Check Point (CHKP) was significantly up yesterday, and there does not appear to be any related news.

Check Point is in the business of providing hardware and software security products. The company provides products for data traffic inspection, intrusion prevention, virtual private networks, content screening and messaging security. Check Point markets its products to large companies and to individual consumers as well. For example in the consumer space, Check Point provides software for securing a PC’s hard drive.

Check Point’s competitors include: Cisco Systems (CSCO), Juniper (JNPR), and Fortinet (Private). Fortinet is in process of filling for an Initial Public Offerning (IPO).

Check Point’s stock price has been blasting off over the last year with an increase of over 50%.

A significant amount of stock option volume was observed for the 2012 Jan 30 call options for Check Point yesterday. This call option is slightly out-of-the-money, so it appears that someone thinks Check Point has more upside.

Cisco has been pretty quiet on the acquisition front, not making any large acquisitions, maybe Cisco is considering purchasing Check Point?

A covered call for Check Point for November looks attractive with a %if unchanged potential return of 3.5% and a %if assigned potential return of 6.0%, the profit from this trade could be realized in 45 days or even less. This position has downside protection of 3.4%, so as long as Check Point’s stock price at expiration does not drop more then 3.4%, the position will be profitable. The call option to sell for this trade would be the November 30 call option with ticker symbol KEQKF.

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To enter the covered call investing position an investor would purchase the stocks in multiples of 100 shares and sell one call option for each 100 shares of stock purchased.

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[tags] hardware, software, security, traffic inspection, intrusion prevention, virtual private networks, content screening, messaging security, PC, Fortinet, out-of-the-money, acquisitions, CHKP, Check Point Software Techs. Ltd., CSCO, Cisco Systems Inc., JNPR, Juniper Networks Inc. [/tags]