Large call spread aimed at Teradyne

By David Russell,

Shutterstock photo

Teradyne is bouncing after a pullback, and the bulls are jumping in.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 5,200 April 16 calls for $0.82. A matching number of April 18 calls were sold at the same time for $0.17, resulting in a cost of $0.65.

The trade appears to be a bullish call spread , with the potential to earn a maximum profit of 208 percent if TER closes at or above $18 on expiration. (See our Education section)

Volume was below open interest in the April 18s, so the investor may have also rolled a long position down to the lower strike. That would also be bullish because the trader would have spent money for contracts that more closely track gains in the semiconductor-testing stock.

TER is up 1.87 percent to $16.03 in early afternoon trading and is up 18 percent so far this year. It's been climbing along with other companies in the chip industry as the economy improves and smartphone demand drives activity.

The stock had also pulled back to the same $15 level that was resistance in July and October. That could make some chart watchers think that it's still trending higher.

Overall option volume is 8 times greater than average so far today, with calls outnumbering puts by 44 to 1.

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

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

This article appears in: Investing Options
Referenced Stocks: TER

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