Synopsys Draws Heavy Call Trades

By Mike Yamamoto, managing editor of OptionMonster

MOUNTAIN VIEW. Calif. (TheStreet) -- Synopsys(SNPS Quote) ended last week at its highest closing price in a year, and option traders apparently believe that the chip software company will climb even higher before Christmas.

The stock finished Friday's session up 1.6% to $23, matching its 52-week intraday high from late September. The stock has gained 65% since its low of $13.94 in November 2008.

More than 75% of the day's option trading took place at the December 25 strike, at which 7,321 calls changed hands in a strong buying pattern for 35 cents to 65 cents, according to optionMONSTER's real-time Heat Seeker system. The trading far exceeded open interest of just 233 contracts, indicating the opening of new positions, and dwarfed the average volume of just nine calls a day for the last month.

The stock saw 9,702 calls and puts trade at all strikes Friday, compared with its average daily option volume of just 374 total contracts. Calls outnumbered puts by more than 14 to 1.

For the calls bought Friday to turn a profit, the stock would need to rise between 10% and 11.5% by the time the options expire on Dec. 18. Synopsys hasn't scheduled its next earnings report, but several industry conferences will be held before December, including the company's annual forum for vendors and customers on Nov. 5.