Options trader Pete Najarian said Friday he's seeing unusual options activity in the semiconductor industry.
There is naked buying to the upside, as well as heavy call buying in names like Applied Materials, Intel and Texas Instruments, said the optionMONSTER.com co-founder.
The aforementioned companies make up the bulk of the Semiconductor HOLDRs exchange-traded fund, which is being bought because the semis continue to reach 52-week highs almost daily. If you look at the chart, the trend has been moving from the lower-left to upper-right and Najarian thinks that will likely continue.
POPS & DROPS
An unexpected rise in the US unemployment rate pushed most stocks down Friday as investors moved money into safer assets. As stocks moved modestly lower in midday trading, these movers caught the traders attention:
Pops (stocks that moved higher)
Verifone (PAY) popped 8%: The electronic payment company's stock rallied after forecasting 2011 earnings of at least $1.60 per share, consistently higher than the average estimate on Wall Street.
"I like it. They raised guidance," Stuart Frankel's Steve Grasso said. "The price action today tells me it's probably going higher."
Drops (stocks that fell)
Chipotle Mexican Grill (CMG) dropped 6%: Shares of this fast food chain operator sold off after being cut to ‘equal-weight’ from ‘over-weight’ at Morgan Stanley. Looking at the valuation of McDonald'sand other chains, Najarian said he understands why Morgan Stanley made this move.
Barnes & Noble (BKS) dropped 1%: After reporting a quarterly loss earlier and weak physical book sales on Wednesday, this stock continued its downward momentum.
Monster Worldwide (MWW) dropped 2%: Shares of the world’s largest online recruiting company fell after US employers added fewer jobs than originally forecast.
"I don't think the jobs report was that bad," Kanundrum Capital founder Brian Kelly said. "I would buy Monster."
EAR TO THE WALL
Haircut salon operator Regis Corp. traded higher Friday on reports that private equity firm Apollo Management is interested in the company once again after its recent stock sell off.
Talk of a buyout isn't new, said Patty Edwards, chief investment officer of Trutina Financial. But the stock "took a haircut" and being as it's 10 percent lower, she said the deal makes more sense because valuation is slightly more compelling.
"This is the type of deal private equity's been liking to do. I think that there's something to the smoke that we're seeing."
Watch the video to see the full conversation.
TRADING THE GLOBE