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Bulls see the light with Cree shining

Cree is rallying, and the bulls are piling in.

optionMONSTER's Heat Seeker monitoring system detected the purchase of about 5,600 April 52.50 calls for $1.10 to $1.25. Volume was 67 times greater than open interest at the strike, indicating that new money was put to work on the long side.

Owning calls locks in the price where shares can be purchased in the maker of light-emitting diodes. They stand to generate significant leverage in the event of rally but will also become worthless if the stock doesn't climb further or drops.

CREE rose 13.56 percent to $50.79 in morning trading after introducing inexpensive new products and raising its financial guidance. The stock, which peaked over $80 in early 2010, has more than doubled since last summer.

Another investor rolled a protective position forward in time, selling about 10,000 June 46 puts for $3.04 and buying an equal number of June 50 puts for $4.90. The transaction cost $1.86 and raises by $4 the level at which they have insurance against a pullback. (See our Education section)

Total option volume is 7 times greater than average so far in the session.

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

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

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