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Today's Exclusive Story Why Options Traders Are Loading Up on Pure StorageWritten by Jeffrey Neal Johnson. Posted: 1/16/2026. 
In Brief- Recent trading data reveals a massive surge in bullish call options, suggesting institutional investors are positioning for a potential rebound in share price.
- The company confirmed a landmark design partnership with a top hyperscaler to replace legacy hard drives with its proprietary and efficient flash storage.
- Data center power constraints are driving demand for energy-efficient storage solutions that better manage raw flash memory than traditional solid-state drives.
In the stock market, price action shows you history, but volume often predicts the future. For investors watching the data infrastructure sector, a specific technical signal recently flashed and deserves a closer look. Pure Storage, Inc. (NYSE: PSTG) recently appeared on the Unusual Call Options list with a noticeable 191% increase in volume. To appreciate the significance, it helps to understand what a call option represents. A call option is a financial contract that gives an investor the right to buy a stock at a specified price in the future. It's a leveraged bet that allows traders to control a large amount of stock with less capital up front. A growing number of investors are paying attention to developments around private space companies and potential future public listings.
In a recent briefing, one research publisher outlines how some investors are seeking early exposure to the space economy through publicly traded assets — without waiting for a formal IPO. The presentation walks through the structure, risks, and mechanics behind this approach for those who want to understand how it works. Read the full sponsor briefing here When volume for these contracts explodes—especially while the stock price is falling—it creates a divergence. That divergence is often a footprint of institutional investors, sometimes called smart money. Retail investors typically sell when they see a stock chart drop. Institutions often use those pullbacks to accumulate positions if they believe the fundamentals remain intact. Over the last 30 days, Pure Storage stock has pulled back approximately 11-12%, trading in the high $60s to mid $70s range. The surge in call options suggests large traders view the sell-off as a buying opportunity. They appear to be betting the market has mispriced the company's role in the next phase of the artificial intelligence (AI) revolution. The timing is notable, aligning with a growing consensus that the hardware powering AI is entering a structural change. Watts per Terabyte: The Only Metric That MattersWhile headlines focus on expensive processors used to train AI, a quieter crisis is emerging in the data center. AI models — the engines behind ChatGPT, Alphabet's (NASDAQ: GOOGL) Gemini, and Meta Platforms' (NASDAQ: META) Llama — are subject to data gravity. They require massive datasets delivered to processors in real time and as fast as possible. For decades, the standard solution for storing that data was the hard disk drive (HDD): mechanical devices with spinning magnetic platters. HDDs are inexpensive to buy but slow, heavy, and power-hungry. In 2026, the primary constraint for building new AI "factories" is often not land or chips but electricity. Data centers are running up against power limits, and owners are searching for ways to optimize existing capacity. That reality has made energy efficiency a competitive weapon. This is where Pure Storage claims an advantage with its proprietary DirectFlash technology. To see the moat, you have to look at how storage architectures differ. Competitors such as Dell Technologies (NYSE: DELL) and Hewlett Packard Enterprise (NYSE: HPE) often build storage arrays from standard, off-the-shelf solid-state drives (SSDs). Each SSD contains its own controller — essentially a small computer that manages data flow and maintenance tasks like garbage collection. When you scale to thousands of drives in a rack, you end up with thousands of tiny controllers consuming electricity on redundant tasks. Pure Storage takes a different approach. Pure's software interfaces directly with raw flash memory modules, removing the onboard controller as the middleman. The system manages data across the array instead of on each individual drive. By eliminating those inefficiencies, Pure arrays can store more data in less space while using significantly less power. The metric that matters in 2026 is watts per terabyte. When a hyperscale data center reaches its power limit, it has two choices: build new power capacity (which takes years) or replace inefficient hardware with more efficient hardware. The bullish options activity suggests the market believes operators are increasingly choosing the latter. Cracking the Code: The End of the Hardware CycleTechnology only pays off if customers buy it. For years, the bear case against Pure Storage was that it couldn't break into the hyperscaler market. Those customers historically followed a build-versus-buy logic: buy cheap components and assemble custom storage systems rather than purchase premium vendors' solutions. That narrative appears to be changing. Pure Storage has confirmed design wins with multiple hyperscalers and continues to deepen its relationship with Meta Platforms. As of early 2026, that relationship has moved from testing into active deployment. This is a watershed for the industry: Pure's DirectFlash technology is now efficient enough that buying from Pure can be cheaper than building in-house. That operational progress is starting to show up in the financials. In its most recent report for the third quarter of fiscal 2026, the company delivered solid results: - Revenue: $964.5 million, a 16% increase year-over-year.
- Profitability: A record non-GAAP operating margin of 20.3%.
Perhaps most important is how Pure is changing its go-to-market through the Evergreen subscription model. Historically, customers bought storage boxes, used them for five years, then replaced them, creating lumpy revenue. Pure's Evergreen approach is more like a utility: customers subscribe and receive non-disruptive controller upgrades over time. This Storage-as-a-Service (STaaS) model creates recurring revenue, which Wall Street typically values more highly because it's predictable and stable. That helps justify the premium valuation the stock commands. The Flash Revolution: Is It Time to Follow the Flow?Despite the bullish signals, investors should remain objective about risks. Pure Storage trades at a premium valuation: its price-to-earnings ratio is materially higher than legacy hardware peers. When a stock is priced for perfection, any slowdown in growth can increase volatility. Recent insider selling by executives has also drawn negative headlines. While such selling is often part of pre-scheduled plans for liquidity, it can rattle retail investors who interpret it as a sign of waning confidence. The company has taken steps to counter those concerns. Management authorized a $400 million share buyback program, signaling the board believes the stock is undervalued. Repurchases reduce shares outstanding, which can help support the share price. The 191% spike in call options indicates institutional players may be looking past near-term noise and focusing on the macro picture. The shift from spinning hard drives to all-flash data centers looks inevitable; it's a matter of when, not if. As AI models expand and power grids feel greater strain, the company that can store the most data with the least electricity will have a meaningful advantage. Right now, the options market appears to be betting that company is Pure Storage. For investors, the recent pullback may be one of the last chances to enter before revenue from these hyperscale deals begins to flow more fully onto Pure Storage's balance sheet.
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