Options Trading News

November 6, 2012  Tue 11:58 AM CT

Chip stocks have been trying to climb, and one investor thinks the upside will continue.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 5,000 December 33 calls in the Market Vectors Semiconductor Fund for $0.55. A matching number of November 31 calls were sold at the same time for $1.15 but volume was below open interest, indicating that an existing position was closed and rolled to the other strike.

The investor probably bought the November 31 calls at an earlier date and is now sitting on profits after stocks including Intel and Texas Instruments bounced from their October lows. He or she collected a credit of $0.60, which may have been their initial investment(See our Education section) , and now has an additional month to enjoy further upside.

The SMH is up 1.25 percent to $32.33 in afternoon trading. The exchange-traded fund has been shuffling in a range for the last year amid worries about the global economy and the PC industry but has outperformed the broader market with a 10 percent gain in the last month.

Overall option volume in the fund is quadruple the daily average, with calls outnumbering puts by more than 100 to 1.
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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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