By Jud Pyle, CFA, chief investment strategist for the Options News Network
) -- Although
did not announce any significant news Monday, but at least one investor is taking a bullish stance on the semiconductor name and boosting call volume out of the gate.
The slightly out-of-the-money Oct. 14 calls have changed hands more than 11,200 times so far today and are home to current open interest of 5,361 contracts. These calls are up 7 cents so far on the day. This computes to an implied volatility of 38.4. The volume weighted average price of these calls is approximately 75 cents, meaning bullish investors who bought the Oct. 14 calls need AMAT shares to expire higher than $14.75 to make money.
AMAT shares are currently trading up 12 cents to $13.85. The Oct. 14 calls have a delta of 51 cents, meaning for every dollar move in the underlying, these options should move by 51 cents. That means these calls should have moved around 6 cents, but call buying activity is pushing their prices slightly higher.
Normal daily option volume in AMAT is approximately 10,000 contracts, and the call buying action we've seen already trumped this figure. So far, more than 13,000 contracts across all strikes have hit the tape today.
Call buying like this does not automatically mean investors should stock up on AMAT shares. The company's stock is currently up 29% higher from a recent low of $10.72, and at least one investor is looking for further upside throughout the next couple months.
-- Written by Jud Pyle in Chicago
Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."