Traders were snapping up calls in Atmel yesterday ahead of the chip maker's earnings report after today's close.
About 5,500 February 7 calls were purchased, led by a print of 3,760 that went for the ask price of $0.40, according to optionMONSTER's Heat Seeker system. The volume was more than triple the strike's open interest before the session began, clearly indicating that this is fresh buying.
ATML rose 1 percent yesterday to close at $7.06. The stock had been declining steadily since trading well above $10 last March but bounced at its 52-week low of $4.37 in mid-November. Shares then ran up to resistance at the $7 level at the end of the year and have been trading in a tight range since then.
Yesterday's in-the-money long calls, which lock in the price where traders can buy the stock, are betting that ATML will pop by the end of next week. But these contracts will rapidly lose value if shares don't move as that expiration date approaches. (See our Education section)
The call buying made up almost all of ATML's total option volume of 5,752 contracts yesterday, which was 13 times higher than its daily average of just 448 in the last month. Only 83 puts changed hands in the name, a reflection of the session's bullish sentiment.
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