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TheStreet Open House

Quick Profits Turned in Skyworks

Stocks in this article: SWKS

By David Russell of OptionMonster

NEW YORK -- Skyworks (SWKS) hit our scanners early Thursday, and the bulls cleaned up fast.

OptionMonster's tracking systems detected the purchase of 5,000 March 33 calls for 65 cents in the session's opening minutes. The stock pushed higher and premiums inflated, roughly doubling to $1.25 by the afternoon.

Those calls continued to build in volume throughout the day, ending the session above 19,500. That was more than 21 times the previous open interest at the strike.

These options lock in the price where investors can buy the semiconductor stock, letting them position for a rally with limited risk. The contracts can also generate significant leverage because of their cheap cost, which is exactly what happened Thursday.

Skyworks' shares gapped up at Thursday's open and finished the session with a gain of 6.39% to $33.32, their highest close since early 2011. The stock has been rallying since November and gapped higher following a strong quarterly report last month.

Overall option volume in the name Thursday was 11 times its daily average for the last month, with calls accounting for a bullish 89% of the total.

Russell has no positions in SWKS.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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