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Bulls return after Skyworks pulls back

By: optionMONSTER
Posted: 10/31/2011 4:16:00 AM
Referenced Stocks: SWKS

The bulls are back in Skyworks Solutions after tripling their money earlier in the month.

On Oct. 4 , traders bought the October 18 calls for $1.15 to $1.20. The chip maker shot above $22 on Oct. 14 , and those contracts were worth more than $4.50.

Buyers came back on Friday morning, this time picking up about 4,000 November 20 calls for $1.80. About 1,400 November 23 calls were bought later in the day for $0.50 to $0.60, and total options volume in the session was triple the daily average, according to optionMONSTER's Heat Seeker tracking system.

The enthusiasm earlier in the month surrounded the use of SWKS's chips in the latest version of Apple's iPhone. It had rallied along with several other suppliers including Nuance Communications, Triquint Semiconductor, and Arm Holdings.

SWKS has pulled back since then, closing Friday down 5.1 percent at $20.29. It's now attempting to hold support at its 50-day moving average and is down from about $35 back in February.

The latest catalyst is the release of fiscal fourth-quarter results after the bell on Thursday. If they're strong, those November calls could deliver some major upside mojo. SWKS has beaten estimates the last two times it reported earnings, but some investors may be concerned after TQNT's weak guidance on Wednesday. (See our new researchLab service)

(A version of this post appeared on InsideOptions on Friday.)