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How bulls are playing Tessera

David Russell (david.russell@optionmonster.com)

Traders are looking for good numbers when Tessera Technologies reports earnings next week.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 3,300 February 19 calls for $1.15 to $1.50. Volume was more than 16 times open interest at the strike, which indicates that new positions were initiated.

The call buyers now have the right to buy shares in the semiconductor company for $19 through expiration no matter how high they might trade during that time. This way, the investors have limited risk and unlimited upside if a rally takes place. (See our Education section)

That makes a lot of sense with quarterly results looming next Wednesday, Feb. 5. Tessera's last report in November was mixed, with profit missing estimates but revenue strong.

TSRA has been drifting aimlessly since late 2009 but yesterday jumped 4.59 percent to $19.59. In that respect, it resembles other technology companies such as F5 Networks , Fortinet , and Altera that have lagged for years but are now starting to climb amid upside option trades.

More than 6,000 contracts changed hands in TSRA yesterday, compared to fewer than 400 in a typical session. Calls outnumbered puts by a highly bullish 88-to-1 ratio, according to the Heat Seeker.

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