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Call buyer looks for LSI to rebound

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Networking-chip maker LSI fell last week along with other names in the sector after Cisco's earnings report, but at least one trader is counting on a rebound.

optionMONSTER's Heat Seeker system shows that 1,888 September 8 calls were purchased in one print for the ask price of $0.15 on Friday. The volume was well above the strike's open interest of 465 contracts, indicating that this is fresh buying.

These long calls lock in an $8 purchase price for the stock no matter how far it might rise, but they could expire worthless if the shares fail to rally by mid-September. The company will present at the Citi Global Technology Conference on Sept. 4, two weeks before that month's option expiration. (See our Education section)

LSI slipped 0.27 percent to $7.48 on Friday, just above its 50-day moving average and near a support level that has held for the last month. The semiconductor manufacturer rose after beating second-quarter estimates on July 24 but gapped down along with other networking-technology companies on Thursday after Cisco's disappointing release, as shown on our researchLAB analysis tool.

Total option volume in LSI topped 7,500 contracts on Friday, more than 6 times its daily average for the last month. Overall calls outpaced puts by 4 to 1.

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