Bull 'LEAPS' for ON Semiconductor

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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.

ONNN 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) market.

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)



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: ASML , INTC , ONNN

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