By Mike Yamamoto of OptionMonster
NEW YORK -- Amkor Technology (AMKR) has paused after a scorching run this year, but traders are looking for the chipmaker to resume its climb.
More than 4,700 August 11 calls were purchased for 45 cents to 55 cents on Friday, according to OptionMonster's tracking systems. This is clearly fresh buying, as open interest in the strike was just 287 contracts before the trades appeared.
These long calls lock in the price where the stock can be purchased through mid-August no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $11.
AMKR rose 0.56% on Friday to close at $10.81 after bouncing right at its 50-day moving average earlier in the session. Shares pulled back after a recent peak of $12.27 on June 18 -- their highest level since May 2008 -- and have been trading sideways since.
The August 11 call buying made up 80% of Amkor's total option volume on Friday, which was nearly six times its daily average for the last month. Overall calls outnumbered puts by a bullish 5-to-1 ratio.
Yamamoto owns AMKR shares.