Energy Conversion Soars on Buyout Rumors

By Jon "DRJ" Najarian, co-founder of OptionMonster

NEW YORK (TheStreet) -- Energy Conversion Devices(ENER Quote) rocketed some 25% along with heavy options activity Tuesday amid rumors that Applied Materials (AMAT Quote) may be interested in buying the solar panel maker.

Energy Conversion averages full-day activity of 4,932 calls, but it traded 50,570 -- more than 10 times the normal turnover -- in Tuesday's session. The action involved several strikes, but the call buying was most notably above open interest at the September 11, September 12.50, and October 13 contracts, according to OptionMonster's proprietary tracking systems.

The stock closed Tuesday at $13.01. It had just hit a new 52-week low last Thursday and remains far below its highs near $70 from almost a year ago.

Applied Materials, one of the largest semiconductor equipment makers, has moved aggressively into the solar space to spur growth. I doubt that Applied Materials is a buyer of Energy Conversion Devices, but stranger things have happened.