Bullish traders were stampeding into TriQuint Semiconductor's stock and options yesterday after a website reported that its chips are being used in Apple's new iPhone 4S.
OptionMonster's real-time tracking systems lit up with strong call buying at the $6, $7, and $8 strike levels in the October and November contracts. The volume at all the strikes was above open interest, indicating that the trades were new positions.
The total option volume yesterday was more than 24 times TQNT's daily average. Calls at all strikes combined outnumbered puts by 21,965 to 4,070, and the vast majority of the options were looking for the stock to pop this month or next.
TriQuint's stock closed the regular session up 24.62 percent to $7.39 and tacked on another 9 percent in after-hours trading. Even with that spike, however, the share price is just half of what it was at the 52-week highs of February.
The flurry of trading began after technology repair site iFixit published photos of a disassembled iPhone 4S that showed TriQuint chips among its components. TriQuint had supplied semiconductors for previous versions of the iPhone, but it was unclear whether its chips would be used in newest model until yesterday. (The iFixit article can be found here).
The company lowered guidance the last time it reported earnings on July 27, and its stock gapped lower the next day. TriQuint is scheduled to announce third-quarter results on Oct. 26, a few days after the Oct. 21 option expiration.
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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.