Applied Materials seen hitting wall

optionMONSTER

Traders were selling calls in Applied Materials at the end of last week.

More than 43,000 AMAT options traded on Friday, compared to a daily average of 5,620 in the last month. Almost all of the action was in the October 16 calls, led by a huge print of 29,325 that was sold for the bid price of $0.30. The volume was far above the strike's previous open interest of 3,992 contracts, showing clearly that it is a new position.

The call selling suggests that the trader sees little upside from current levels. The options were very likely sold against long shares in a covered-call position , which would be bullish up to the $16 strike price, but not beyond. The position will outperform owning shares outright for any price up to $16.30. (See our Education section)

AMAT was down 1.05 percent on Friday to close at $15.51. The company, which makes equipment used in semiconductor manufacturing, was up at a high of $16.78 in mid-July.


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