Takeover Hopes Draw Bulls to MIPS
By David Russell, reporter at OptionMonster
NEW YORK -- MIPS Technologies (MIPS) wants to be acquired, and the bulls jumped into the name Tuesday.
The stock rallied last Thursday after hiring Goldman Sachs to find a buyer, followed by a pause in the next two sessions. OptionMonster's tracking systems detected heavy activity in the July 7 calls, with more than 3,600 contracts trading against previous positioning of just 1,173. Most of the large blocks were purchased early for 75 cents and 80 cents.
MIPS started to climb shortly after the option activity and ended the session up 11% to $6.97. The company, which provides designs for home-electronics devices like DVD players and TV set-top boxes, lost more than two-thirds of its value last year and has been basing out since August. It is scheduled to post earnings results after the close on April 26.Tuesday's calls fix the price the trader must pay to buy the stock, so they can appreciate rapidly if MIPS rallies. For instance, the contracts ended the session valued at more than $1, representing a gain of more than 20%. The risk of options is that, unlike the shares themselves, they can lose all of their value if the stock fails to move in the right direction. More than 6,000 MIPS contracts traded overall Tuesday. Calls outnumbered puts by more than 30 to 1, a reflection of the bullish sentiment. Russell has no positions in MIPS.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV