ON Semiconductor hit a five-month high on Friday, and traders are looking for the bullish momentum to continue for another three weeks.
optionMONSTER's Heat Seeker tracking system found heavy buying in the January 8 calls, where about 7,700 contracts traded for $0.30 to $0.50 on Friday in volume far above the previous open interest of 794 options. Another 2,352 February 8 calls were purchased for $0.59 to $0.70, also above open interest of 89 contracts.
These long calls lock in the price where traders can buy the stock for the next three weeks no matter how far it might rise. But the contracts, which will track the share price closely because they are in the money , will quickly lose value if the stock doesn't climb soon. (See our Education section)
ONNN gained 1.23 percent to $8.24 on Friday, its highest close since Aug. 1. The company, whose analog chips are used in applications such as cars and computer clocks, has risen every day since breaking through resistance around the $7.50 level on Dec. 16.
The company has not scheduled its next earnings report, but last year's calendar suggests that quarterly results will be announced in early February.
Total option volume in ONNN topped 11,000 on Friday, compared with a daily average of just 53 contracts for the last month. Only 45 puts traded in the session, a reflection of the day's bullish sentiment.
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