Silicon Motion Technology has been pulling back from a monster
run, and the bulls are stepping in.
Our tracking systems detected the purchase of almost 5,000 February
20 calls against open interest of just 689 contracts. Most of them
traded for $0.75 to $0.80.
lock in the price investors must pay to buy shares, so they can
generate major leverage if the stock moves in the right direction.
But the options can also lose all their value if a rally doesn't
occur before they expire at the end of next week. (See our
SIMO rose 1.79 percent to $19.30 yesterday, down from an intraday
high of $20.45. The provider of mobile chips more than doubled last
year amid repeatedly strong earnings reports. It beat estimates
again last week, prompting management to issue guidance above
The stock tried to rally but then rolled over as investors took
profits, falling from about $24 to $19. Yesterday's option activity
suggested that some buyers are now returning to the name.
More than 8,300 contracts traded in total, compared with the
average of about 500 in a session. Overall calls at all strikes
outnumbered puts by 10 to 1.
(A version of this post appeared on
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