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Traders bet on Ericsson comeback

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Ericsson is up sharply this year, and traders are betting on more gains in the cell-phone maker.

More than 2,500 July 13 calls have traded in a strong buying pattern this morning, going for prices between $0.85 and $0.90, according to optionMONSTER's Heat Seeker system. The volume was more than 4 times the strike's open interest of 603 contracts before the session began, indicating that this is new activity.

ERIC is up 1.23 percent to $13.19 this morning. The Swedish company gapped up from below $11 after reporting fourth-quarter earnings at the end of January and has been stair-stepping higher this month. It has struggled to stay relevent in the mobile-phone industry against Apple and Samsung, vying with BlackBerry and Nokia for the remaining market share.

The company is presenting at the Citibank San Francisco/New York Roadshow this week. It is scheduled to hold its annual shareholders meeting at April 9 and will release first-quarter results on April 24.

Today's long calls , which lock in the purchase price of the stock, will track the share price closely because they are already in the money. These contracts are looking for ERIC to gain roughly 5 percent or more by mid-July but will expire worthless if shares fall below the $13 strike price. (See our Education section)

Total option volume is above 3,000 contracts, more than triple its daily average for the last month. Calls outnumber puts by 10 to 1, a reflection of the session's bullish sentiment.

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