Someone is taking LEAPS of faith in ON Semiconductor.
optionMONSTER's Heat Seeker tracking system detected a long-term
bullish trade in the maker of energy-efficient integrated circuits.
The investor purchased 7,000 January 2013 7.50 calls for $1.85 and
sold an equal number of January 2013 7.50 puts for $1.95.
The position collects a credit of $0.10 and will earn unlimited
profits if ONNN closes above $7.50 on expiration 26 months from
now. It will lose money below that level. The options used are
known as Long-Term Equity AnticiPation Securities, or "LEAPS,"
because of their long time horizon.
ONNN is up 0.15 percent to $7.07 in early afternoon trading and is
little-changed in the last three months. The stock has been
consolidating between about $6.20 and $7.30 since June, basing out
after a selloff in the spring.
Its earnings have been solid, with profit and revenue ahead of
forecasts on Aug. 4. Management also issued guidance above the
mid-range of analysts' forecasts and, since then, announced new
products linked to the fast-growing light-emitting diode (LED)
ONNN had struggled amid broadly bearish sentiment in the
semiconductor sector, but conditions may be improving judging by
this week's strong results from Intel and ASML Holding. The bullish
trade in ONNN pushed total option volume in the name to 6 times
greater than average.
(Chart courtesy of tradeMONSTER)
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