Bulls Pile Into Applied Materials

By David Russell of OptionMonster
NEW YORK -- Applied Materials (AMAT) reports earnings next month, and traders can't wait to get long.
OptionMonster's tracking systems detected the purchase of more than 4,000 June 21 calls for 35 cents on Thursday. Some 15,000 January 25 calls followed minutes later for 36 cents and 38 cents. Volume was more than four times open interest at both strikes, which indicates that new money was put to work on the long side.
Calls lock in the price where a stock can be bought, letting investors cheaply position for a rally. These options can also generate significant leverage if the stock moves in the right direction, but they will expire worthless if shares stall or pull back.
Applied Materials' shares rose 0.62% to $19.37 Thursday. The maker of semiconductor equipment surged to a five-year high above $21 early this month, then fell along with the broader technology sector and has been attempting to rebound above its October peaks since. Earnings come out after the market closes on May 15.
Total option volume was more than three times average amounts, with calls outnumbering puts by 25 to 1.
Russell has no positions in AMAT.

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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