Traders hope ARM gets a helping hand

By David Russell,

Shutterstock photo

ARM Holdings has fallen to support, and the bulls want to run it back up.

Our tracking systems detected the purchase of about 8,500 June 26 calls for $0.70. Volume was almost 50 times the previous open interest in the strike.

Those long calls lock in the price investors must pay for shares in the semiconductor maker, a key supplier to Apple's iPhone and iPad. These options can generate significant leverage if the stock rallies, but they will expire worthless if it doesn't. (See our Education section)

ARMH was down when the options traded but later regained its footing and ended the day up 0.39 percent to $25.22. The shares were trading above $28 in mid-April but gapped lower after management said last week that full-year revenues would only match expectations.

Since then the stock has been holding the same $25 area where it had bounced previously. Yesterday's option activity reflects a belief that the shares will now hold that level and rally in coming weeks.

Overall option volume was quadruple the daily average in the session. Calls outnumbered puts by 3 to 1, a reflection of the bullish sentiment.

(A version of this post appeared on InsideOptions Pro yesterday.)

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: ARMH

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