Complex bet on new highs for Altera

David Russell (david.russell@optionmonster.com)

The bulls have already made money in Altera, and now one trader is looking for new 52-week highs.

On Aug. 27 , optionMONSTER's Heat Seeker monitoring system detected buying in the December 35 calls for $2.05. The chip maker proceeded to rally, and those contracts have now almost doubled to $3.50.

Today's traders are even more aggressive, looking for a rip higher in the next two months. This time, the Heat Seeker shows the purchase of 2,100 October 39 calls for $0.52 and the sale of 1,785 October 41 calls for $0.13. Volume is more than triple the previous open interest at both strikes, indicating that new money was put to work on the long side.

This position looks like a modified vertical spread , which uses premium from selling contracts that are farther out of the money to buy others closer to the money . Today's transaction will leverage a move from $39 to $41 and leave some calls in play for a break above the top of that range. (See our Education section for more on ways that option trades can be tailored to your objectives.)

ALTR is up 0.52 percent to $37.42 in afternoon trading and has risen 13 percent in the last three months. It's significantly outperformed the Nasdaq, the S&P 500, and the semiconductor sector in that time. The stock peaked around $41 early 2012, so today's trader is apparently targeting a return to that level.

Total option volume is quadruple the daily average so far today, with calls outnumbering puts by a bullish 7 to 1 ratio.


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