Traders were snapping up calls in Freescale yesterday on the eve of the semiconductor company's earnings report today.
optionMONSTER's Heat Seeker system detected the purchase of 2,178 November 10 calls, including a single print of 2,000 that went for $0.30. The volume was 5.5 times the open interest of 395 contracts in the strike at the start of the session, clearly indicating new positions.
FSL fell 1.08 percent to $9.18 yesterday. Shares dropped sharply from above $11 in mid-September and have been trading in a very tight range for the last month.
Freescale, which makes chip technology for remote controls and other wireless systems, introduced a new type of sensor to measure the voltage of car batteries on Monday. The company, which has been the subject of buyout rumors , is scheduled to release third-quarter results tomorrow after the close.
Yesterday's call buyers are looking for the stock to gain more than 12 percent in a little more than three weeks. The traders could sell these options at a profit earlier if FSL rallies, but the contracts will expire worthless if the stock doesn't move. (See our Education section)
The call purchases made up almost the entire option volume in all strikes in the name yesterday, which 17.5 times its daily average. Only 57 puts changed hands in the session, a reflection of the bullish sentiment.
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