Heavy Call Buying in Applied Materials

By Pete Najarian, co-founder of OptionMonster

Options traders are stepping in to buy upside calls in Applied Materials (AMAT Quote) ahead of a press event it is hosting Thursday with solar industry experts.

Activity on Wednesday was concentrated in mostly the July 10 and July 11 contracts, in which more than 9,500 and 12,000 calls have traded, respectively, with strong buying patterns, according to OptionMonster's tracking systems. Total Applied Materials calls traded at all strikes outnumbered puts by more than 11 to 1.

The chip equipment maker's shares closed Wednesday up 1.4% to $11.08, but have been falling steadily since their highs earlier in the month. The call buyers may be expecting the stock to break out of its tight trading range of the last couple of months of between $10 to $12.

Quarterly earnings released mid-May showed weakness in the company's solar business, which Applied Materials has touted as key to its growth. Clean energy legislation will be critical to that strategy, and the company is holding an event in Germany Thursday on renewable energy policies.