Calls pile up in Applied Materials

David Russell (

Applied Materials reports earnings next month, and traders can't wait to get long.

optionMONSTER's Heat Seeker tracking program detected the purchase of more than 4,000 June 21 calls for $0.35 yesterday. Some 15,000 January 25 calls followed minutes later for $0.36 and $0.38. Volume was more than 4 times open interest at both strikes, which indicates that new money was put to work on the long side.

Long calls lock in the price where a stock can be bought, letting investors cheaply position for a rally. These options can also generate significant leverage if the stock moves in the right direction, but they will expire worthless if shares stall or pull back. (See our Education section)

AMAT rose 0.62 percent to $19.37 yesterday. The maker of semiconductor equipment surged to a five-year high above $21 early this month, then fell along with the broader technology sector and has been attempting to rebound above its October peaks since. Earnings come out after the market closes on May 15.

Total option volume was more than 3 times average amounts, with calls outnumbering puts by 25 to 1.

(A version of this post appeared on InsideOptions Pro yesterday.)

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