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This Chip Firm to Bounce Ahead of Earnings: Trader

At least one trader is betting that ON Semiconductor will bounce heading into earnings next week.

More than 2,300 February 8 calls were bought for $0.25 in the final 25 minutes of trading yesterday, according to OptionMonster's tracking systems. The purchases came after the stock pulled back from an 8.2 percent drop and found support at its 200-day moving average.

About 2,000 contracts were sold earlier in the session, pushing volume in the strike to 4,410 against open interest of 2,738. As a result, it's not entirely clear whether the late-day call buying represented new money or the closing of existing short positions. Either way, however, it reflects a belief that the stock's downside is limited.

ON Semiconductor fell 6.3 percent to $7.44 in the session and is down 15 percent in the last month. The chipmaker gapped higher on strong results and a bullish forecast after its last earnings release on Nov. 3. The next report comes out after the bell on Feb. 3.

The company's shares need to rally at least 11 percent by expiration for yesterday's call buyer to turn a profit.

Overall options volume in the name was five times greater than average yesterday, with calls outnumbering puts by 18 to 1.

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ON Semiconductor Competes With:

Fairchild Semiconductor International

STMicroelectronics

Texas Instruments

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David Russell is a reporter and writer for OptionMonster.

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