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How a trader made over $1 million in two days

Options Action: Bullish bet on AMAT

Someone is making a lot of money in Applied Materials.

On seemingly little news, one trader made a very big bet Thursday that Applied Materials is going to break out to new highs, and so far this trader is winning.

On Thursday, when options volume in the semiconductor ran six times their daily average, one trader bet $1.74 million that the stock will stay above current levels throughout the next week. Specifically, the trader bought 20,000 of the Feb. 27 weekly 24-strike calls for 87 cents.

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Since one options contract controls 100 shares of stock, each contract in this particular trade costs $87, bringing the total costs of the trade to $1.74 million (20,000 x $87). In just one day, those calls have nearly doubled in value as shares of Applied Materials have rallied 5 percent in two days. Those calls are now worth $1.60 each, leaving whoever made this trade with a cool $1.4 million in paper profits ($160-$87 = $73 X 20,000).

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"This is the type of trade that catches traders attention," said Dan Nathan, the founder and editor of RiskReversal.com and a CNBC contributor. "[This trade] is betting a lot of premium for short-dated calls that are in the money with no scheduled events."

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Nathan noted that a rumor that Applied Materials could purchase Tokyo Electron sooner than expected could be the source of the bullish flow. "When you look at the chart, the company has been in a range since reporting earnings last week, and it popped [Thursday] on this news," said Nathan. "If the rumors are true, this could be a catalyst for the stock."

Applied Materials agreed to buy Tokyo Electron for $10 billion in September 2013, a deal which was delayed due to regulatory approvals.