NEW YORK -- Semiconductors names were strong Tuesday, and the bulls turned to chip-equipment maker Applied Materials (AMAT).
OptionMonster's tracking systems detected the purchase of some 27,000 March 17 calls, including one large block priced for $1.04 and another big chunk for $1.08 an hour later. The volume was far above the strike's open interest of 4,354 contracts before the trades appeared, clearly indicating that this is fresh buying.
These calls lock in the price where the stock can be purchased through mid-March no matter how far it might climb. But the contracts, which will closely track the share price because they are already in the money, will quickly lose value if the stock does not climb in coming weeks.
Applied Materials' shares rose 1.79% to $17.63 Tuesday after double upgrades of chip giant Intel (INTL) triggered buying across the semiconductor space. The stock had a big run between late 2012 and October 2013, followed by consolidation since.
Total option volume was 10 times greater than average in the session, with calls outnumbering puts by a bullish 15-to-1 ratio.
Yamamoto has no positions in AMAT.