Call buyers streamed into Broadcom yesterday, as the chip maker ran higher with the rest of the technology sector.
The option action centered on the December 36 strike with buyers paying about $1.43 to $1.78 throughout the day as the largest block of 3,943 calls went for $1.46. More than 6,700 calls traded against previous positioning of 1,778, indicating that these are newly opened positions.
Long calls lock in the entry price investors have to pay to buy the stock. If it goes up even modestly, those options could make a much bigger move. But they also can lose all their value if the shares don't perform.
Broadcom rose 4.14 percent to close at $35.95 yesterday. The company designs and develops all-in-one "system on a chip" technology that enables the delivery of voice, video, and multimedia content.
The activity gave calls a 2-1 edge over the puts in the name yesterday, reflecting the bullish sentiment.
—Najarian owns BRCM shares.
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