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Halftime—Pete Najarian: Heavy Activity In This Space

Friday, 3 Dec 2010 | 2:00 PM ET

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.

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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."

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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.

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TRADING THE GLOBE

Trading the Globe: China
The Regis Corp. good haircut trade, and trading the globe with a focus on China, with CNBC's Melissa Lee & the Fast Money traders. And a look at the real jobs numbers from the perspective of Martin Mucci, Paychex CEO. Paychex provides payroll services to small businesses.

China on Friday said it will take a more a 'prudent' monetary stance next year. So is it time to take profits as the cooling begins?

"We've had a big sell off in the Chinese market in anticipation of these moves, so I think that most of this news is out there," Kelly argued. "This is not new information."

Kelly recommends keeping cool and holding any China-related positions.

To see Kelly's full comments on China, watch the video—it begins at 1:15.

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CALL THE CLOSE

Here's how the "Fast Money" traders are approaching the remaining hours of trading Friday:

"Jobs not as bad as everybody thinks," Kelly reiterated. "I'm a buyer."

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Edwards recommends watching the close. She's not willing to take any risks.

Grasso needs the S&P 500 index to close above the 1,228 level before "he's on the bull ride."

Najarian thinks there's still room to the upside. He expects to the S&P to break through that 1,228 level.

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Trader disclosure: On December 3, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian Owns (GRS) Call Spreads; Pete Najarian Owns (GDXJ) Call Spreads; Pete Najarian Owns (DRYS) Call Spreads; Pete Najarian Owns (LOW) Calls; Pete Najarian Owns (MSFT) Call Spreads; Pete Najarian Owns (TCK) Call Spreads; Pete Najarian Owns (C); Pete Najarian Owns (MS); Pete Najarian Owns (NTRS); Pete Najarian Owns (WLT) Call Spreads; Pete Najarian Owns (MEE) Call Spreads; Pete Najarian Owns (FIRE); Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MOT), (MHY), (NDAQ), (PFE), (PRST), (X)

For Patty Edwards
Edwards Owns (AAPL) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (GS) For Clients
Edwards Owns (TIF) For Clients
Edwards Owns (AMZN) For Clients
Edwards Owns (F) For Clients
Edwards Owns (TTM) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (XLK) For Clients

For Joe LaVorgna
No disclosures

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (JPM)
Accounts Managed By Kanundrum Capital Own (C)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (GDXJ) Straddles
Accounts Managed By Kanundrum Capital Own (DRYS)
Accounts Managed By Kanundrum Capital Own (AAPL)
Accounts Managed By Kanundrum Capital Own (ARMH)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (RDC)
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (TBT)

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (AAPL)
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co And Its Partners Own (UNM)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (MCD)
Stuart Frankel & Co and it’s partners are short (AAPL)

CNBC.com with wires.

  Price   Change %Change
AMAT
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BKS
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CMG
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INTC
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MWW
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PAY
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RGS
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TXN
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MCD
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MV SEMI
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