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Will Freescale finally break out?

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A trader is looking for Freescale Semiconductor to break through a stubborn resistance level and rally in the next month.

optionMONSTER's Heat Seeker system detected the purchase of 2,000 October 20 calls for $0.20 to $25 on Friday. This is a new position, as there was no open interest in the strike before the trade appeared.

These long calls lock in the price where the stock can be bought in the next four weeks no matter how far it might climb. They could be sold earlier at a profit if premiums gain with a rally before then but will expire worthless if shares remain below the $20 strike price. (See our Education section)

FSL was down fractionally on Friday to close at $16.97 after hitting a 52-week high at $17.44 in the previous session. The chip maker rose sharply after bouncing off its 200-day moving average near $14 in late August but has faced resistance repeatedly around its current level since pulling back from an all-time high of $20.97 reached in July 2011.

Total option volume in FSL on Friday was more than 9 times its daily average for the last month. Overall calls outpaced puts by almost 2 to 1.

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