OptionMonster's tracking systems detected heavy buying in the August 10 calls, with initial blocks trading for 25 cents to 30 cents. The chipmaker's stock worked its way higher, and those premiums rose to 40 cents by the early afternoon. Some 16,700 contracts changed throughout the session, almost 38 times the strike's previous open interest, indicating that new positions were initiated.
Long calls lock in the price where a stock can be purchased, letting investors cheaply position for a rally. The contracts can provide substantial upside leverage but can also lose value if shares stall or pull back.
Atmel shares rose 3.49% to $9.20 on Tuesday and are up 18% in the last month. The semiconductor company's most recent earnings report on April 30 beat expectations on the top and bottom lines. The stock ground sideways for the next three weeks but then found support at its 200-day moving average and has been ripping higher since.
Overall option volume in the name was 48 times greater than average in the session, with calls accounting for a bullish 97% of the total.
Russell has no positions in ATML.