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Calls bet Atmel will keep running

David Russell (david.russell@optionmonster.com)

Atmel has been barreling higher, and yesterday the bulls piled in.

optionMONSTER's Heat Seeker program detected heavy buying in the August 10 calls, with initial blocks trading for $0.25 to $0.30. The chip maker's stock worked its way higher, and those premiums rose to $0.40 by the early afternoon. Some 16,700 contracts changed throughout the session, almost 38 times the strike's previous open interest, indicating that new positions were initiated.

Long calls lock in the price where a stock can be purchased, letting investors cheaply position for a rally. The contracts can provide substantial upside leverage but can also lose value if shares stall or pull back. (See our Education section)

ATML rose 3.49 percent to $9.20 yesterday and is up 18 percent in the last month. The semiconductor company's most recent earnings report on April 30 beat expectations on the top and bottom lines. Shares ground sideways for the next three weeks but then found support at their 200-day moving average and have been ripping higher since.

Overall option volume in the name was 48 times greater than average in the session, with calls accounting for a bullish 97 percent of the total.

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

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