Options Trading News

February 22, 2013  Fri 9:53 AM CT

Kulicke & Soffa Industries fell on a weak forecast last month, but one investor expects a bounce.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 2,477 March 11 calls against open interest of just 251 contracts. Almost all the volume priced for $0.30.

The investor now has the right to buy shares in the maker of semiconductor gear for $11, no matter how high they trade. That will result in significant leverage if the stock rallies, preventing him or her from missing a move while sparing them the expense of buying shares. (See our Education section for more on how options can be used to manage trades.)

KLIC is up 0.09 percent to $10.94 this morning but is down 12 percent in the last month. Most of that drop occurred on Jan. 29, when the company's quarterly results beat estimates, but its guidance was sharply below consensus.

Shares have now returned to roughly the same level where they peaked in November and are holding above their 200-day moving average. That could be leading some chart watchers to think that the stock is due for a bounce.

Total option volume is quadruple the daily average, with calls outnumbering puts by 47 to 1.
Share this article with your friends


Premium Services

Education & Strategy

Market Level Making You Nervous, Huh? Part 3

In last week's article, we discussed how important the extra cash you save by using the Stock Replacement Strategy over buying the actual stock is! That extra cash in our account instead of being unnecessarily tied up in a stock position allows us to buy the puts we would need to protect our downside in the case of a major sell-off.

View more education articles »