Options Trading News

January 14, 2014  Tue 12:20 PM CT

Semiconductors are exploding higher today, and one large bull is sticking with industry leader Intel.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 34,642 February 26 calls for $0.75 and the sale of 38,200 January 26 calls for $0.55. Volume was below open interest in the nearer-dated contracts, which suggests that an existing long-call position was closed and rolled forward in time.

Making the adjustment cost about $497,000 and gives the investor an additional month to profit from gains in the chip maker's stock. It also protects the trader from losing money in a quick pullback after fourth-quarter earnings are released Thursday afternoon. (See our Education section for more on managing risk with options.)

INTC is up 3.84 percent to $26.48 in afternoon trading after receiving upgrades from JP Morgan and Jefferies. One cited a stable PC market while the other saw better pricing, and both are positive on new CEO Brian Krzanich.

The stock is currently back to its highest price since August 2012. Other chip-related names are strong today, including Teradyne, KLA Tencor, Broadcom, and Advanced Micro Devices.

Overall option volume is almost 6 times greater than average in INTC so far today, with calls accounting for a bullish 74 percent of the total.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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