NEW YORK -- Bullish option traders are charging into the semiconductor space.
OptionMonster's Heat Seeker tracking system detected a slew of upside trades in companies including Himax Technologies (HIMX) , Teradyne (TER) , On Semiconductor (ONNN) , Intel (INTC) and Micron Technology (MU) . Most of them targeted moves by early next year.
Our first alert was in Himax, where traders snapped up the December 7.50 calls for 30 cents with the stock trading for about $7.30. Shares then pushed higher and ended the session up 7.97% to $7.59, sending those contracts higher by about 50%.
That kind of leverage is possible because the price of options is so much cheaper than the cost of their underlying shares. Investors use long calls to lock in a purchase price while putting less capital is at risk if the stock drops.
Teradyne hit minutes later with January 20 calls trading for 90 cents. More than 8,600 of those would change hands in volume well above previous open interest of 5,946 contracts. On Semiconductor's buyers focused on the same month, snapping up 5,500 January 10 calls for 35 cents. Teradyne rose 2.23% to $20.21, and On Semiconductor climbed $3.60% to $9.79.
Intel saw heavy volume in its April 39 and 44 calls in what may have been a bullish vertical spread. In Micron, the April 27 in-the-money contracts were purchased. Both transactions occurred as the stocks broke out to their highest levels in more than a decade.
Overall option volume in the semiconductor sector was twice its average amounts, with calls outnumbering puts by 2 to 1.-- Written by David Russell of OptionMonster
Russell has no positions in any of the stocks cited in this article.