Trades look for ON Semi to bounce

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ON Semiconductor snapped back from a 52-week low on Friday, and traders are confident it's done going down.

ONNN About halfway through the morning, optionMONSTER's Heat Seeking tracking system detected the sale of 3,000 January 2012 5 puts for $0.70 and the purchase of an equal number of January 2012 7.50 calls for $1, resulting in a cost of $0.30. The same transaction was repeated in smaller pieces later in the day on a total of 7,000 contracts.

The strategy, known as a bullish combination, will simulate a long position in the stock and make money if ONNN pushes higher over the next 16 months or closes above $7.80 on expiration.


An additional 10,000 January 2012 5 puts were sold on their own over the course of the session. The transactions are consistent with a broader pattern we have seen of late where traders write large blocks of out-of-the money puts to generate income. The activity was unusual, however, because it involved much longer dated contracts than has been typical recently.

ONNN ended the session up 3.05 percent at $6.41, after touching as low as $6.08 within the first hour of trading. The company, which bills itself as a provider of energy-efficient chips for the green industry, reported better-than expected earnings and revenue on Aug. 4. The midpoint of its top-line guidance for the next quarter was slightly above expectations.

One event that could potentially affect trading is the Citi Technology Conference in New York on Sept. 9, when CFO Donald Colvin will make a presentation at 9:10 am eastern time.

Overall options volume in ONNN was 22 times greater than average on Friday.

(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: ONNN

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