OptionMonster's Heat Seeker system detected heavy buying in the March 41 calls for 42 cents to 50 cents less than half an hour after Monday's opening bell. Some 11,500 contracts would change hands throughout the session, more than triple the previous open interest in the strike, indicating that these are new positions.
Long calls lock in the price where investors can purchase a stock, which lets them position for a rally with limited risk. They can also result in significant leverage on a%age basis but will lose value on a pullback.
Xilinx was up 2.5% when the options traded but proceeded to end the session up 4.15% to $41.41. The calls almost doubled to as much as 78 cents in that time.
The maker of programmable semiconductors has been trying to hold its ground around $40 after sliding from a 52-week high above $55 last spring. The shares have mostly remained below their 50-day moving average during that time, but are now trying to break free of that resistance. Earnings have mostly missed estimates.
Overall option volume in the name was five times greater than average in the session. Calls accounted for a bullish 74% of the total.
-- Written by David Russell of OptionMonster
Russell has no positions in XLNX.