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January 15, 2014  Wed 5:16 AM CT

AMAT: SEE CHART GET CHAIN FIND STRATEGIES
Semiconductors names were strong yesterday, and the bulls turned to chip-equipment maker Applied Materials.

optionMONSTER's Heat Seeker system detected the purchase of some 27,000 March 17 calls, including one large block priced for $1.04 and another big chunk for $1.08 an hour later. The volume was far above the strike's open interest of 4,354 contracts before the trades appeared, clearly indicating that this is fresh buying.
 
These long calls lock in the price where the stock can be purchased through mid-March no matter how far it might climb. But the contracts, which will closely track the share price because they are already in the money, will quickly lose value if the stock does not climb in coming weeks. (See our Education section)

AMAT rose 1.79 percent to $17.63 yesterday after double upgrades of chip giant Intel triggered buying across the semiconductor space. It had a big run between late 2012 and October 2013, followed by consolidation since.

Total option volume was 10 times greater than average in the session, with calls outnumbering puts by a bullish 15-to-1 ratio.

(A version of this post appeared on InsideOptions Pro yesterday.)
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The Strike-Based Greeks

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