OptionsHouse

Options Trading News

May 8, 2013  Wed 12:06 PM CT

SMH: SEE CHART GET CHAIN FIND STRATEGIES
Semiconductors have been coming to life, and big institutional players don't want to be left behind.

optionMONSTER's Heat Seeker monitoring system detected the purchase of some 7,100 June 40 calls on the Market Vectors Semiconductor exchange-traded fund for $0.25 and $0.30. Volume was more than 500 times open interest at the strike, indicating that new money was put to work on the long side.

These long calls lock in the price where shares can be purchased in the fund, whose big holdings include Intel, Taiwan Semiconductor, and Texas Instruments. The contracts stand to generate significant leverage if SMH continues to climb, providing upside exposure at a fraction of the cost. That also limits losses if it drops. (See our Education section for more on how options can be used to manage risk.)

SMH is up 1.16 percent to $38.36 this afternoon. It's up more than 10 percent in the last month as sentiment has improved toward the global economy but lagged the broader market in the preceding year.

Total option volume is 7 times greater than average in the fund so far today, with calls outnumbering puts by 140 to 1.
Share this article with your friends


Related Stories

SMH

Heavy put buying shows caution on chips

September 26, 2016

The Market Vectors Semiconductor Fund is up 16 percent in the last three months, but one large trade is positioning for a possible pullback.

SMH

Put action shows caution in chip fund

September 2, 2016

The Market Vectors Semiconductor Fund has rallied 16 percent in the last three months, but one trader is positioning for a possible drop.

OptionsHouse

Premium Services

Education & Strategy

Using spreads to minimize risk

Last week we discussed the risk vs reward profile of a debit call spread in Wells Fargo (WFC). This week we will run thru the risk vs reward of selling a credit put spread to achieve the same exposure of that debit call spread.

View more education articles »