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Traders looking for bounce in Amkor

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Amkor Technology has paused after a scorching run this year, but traders are looking for the chip maker to resume its climb.

More than 4,700 August 11 calls were purchased for $0.45 to $0.55 on Friday, according to optionMONSTER's Heat Seeker tracking system. This is clearly fresh buying, as open interest in the strike was just 287 contracts before the trades appeared.

These long calls lock in the price where the stock can be purchased through mid-August no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $11. (See our Education section)

AMKR rose 0.56 percent on Friday to close at $10.81 after bouncing right at its 50-day moving average earlier in the session. Shares pulled back after a recent peak of $12.27 on June 18--their highest level since May 2008--and have been trading sideways since.

The August 11 call buying made up 80 percent of Amkor's total option volume on Friday, which was nearly 6 times its daily average for the last month. Overall calls outnumbered puts by a bullish 5-to-1 ratio.

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

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