Is Teradyne ready to go on a tear?


Semiconductors have been strong day in and day out, and now the bulls are turning to Teradyne.

optionMONSTER's Heat Seeker tracking program detected the purchase of almost 3,900 May 20 calls, most of which priced for $0.75 to $0.90. Volume was more than 100 times previous open interest at the strike, indicating that new money was put to work.

Such long calls lock in the price where investors can buy a stock, letting them generate cheap leverage while limiting the amount of money at risk. In this case, a move of just 10 percent in the underlying shares will double their money, but the contracts could expire worthless in mid-May if shares stall or pull back. (See our Education section)

TER rose 0.91 percent to $20.07 yesterday. The maker of chip-testing equipment rallied sharply in December and January but has been consolidating since. It's been finding support along its rising 50-day moving average more recently, which could make some chart watchers expect a breakout soon.

Other semiconductor names have also seen bullish activity in recent sessions, including Qualcomm, Altera, and Broadcom.

Total option volume in Teradyne was 14 times greater than average yesterday, with overall calls outnumbering puts by 33 to 1.

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

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