Will Cree light up with another rally?

optionMONSTER

Cree has more than double in value since mid-January, and traders are looking for even more gains in the next two months.

More than 2,900 August 67.50 calls traded in a heavy buying pattern on Friday as premiums rose from $2.49 to $3.22, according to optionMONSTER's Heat Seeker tracking system. The volume was well above the strike's open interest of just 151 contracts before the session began, indicating that these are new positions.

These long calls , which lock in the price where traders can buy the stock, are betting that CREE will rally back above the $70 level for the first time since December 2010. But the contracts will expire worthless if they remain below $67.50 through Aug. 16, just days after the company's next scheduled scheduled earnings report on Aug. 13. (See our Education section)

CREE rose 2.19 percent on Friday to close the week at $63.83. The LED product manufacturer reached $66.78 on June 19, its highest price since the start of 2011, as popularity has risen for the energy-saving lighting technology.  

Total option volume in the name topped 12,500 contracts on Friday, more than 2.5 times its daily average for the last month. Overall calls outpaced puts by 2 to 1 in the session.

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