Is Teradyne Ready to Go on a Tear?

By David Russell of OptionMonster
 
NEW YORK -- Semiconductors have been strong day in and day out, and now the bulls are turning to Teradyne (TER).
 
OptionMonster's tracking programs detected the purchase of almost 3,900 May 20 calls, most of which priced for 75 cents to 90 cents. Volume was more than 100 times previous open interest at the strike, indicating that new money was put to work.
 
Such long calls lock in the price where investors can buy a stock, letting them generate cheap leverage while limiting the amount of money at risk. In this case, a move of just 10% in the underlying shares will double their money, but the contracts could expire worthless in mid-May if shares stall or pull back.
 
Teradyne shares rose 0.91% to $20.07 on Tuesday. The maker of chip-testing equipment rallied sharply in December and January but has been consolidating since. It's been finding support along its rising 50-day moving average more recently, which could make some chart watchers expect a breakout soon.
 
Other semiconductor names, such as Qualcomm, Altera, and Broadcom have also seen bullish activity in recent sessions.
 
Total option volume in Teradyne was 14 times greater than average Tuesday, with overall calls outnumbering puts by 33 to 1.
 
Russell has no positions in TER.

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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