Ambarella is surging.
Shares of the GoPro supplier were more than 7 percent higher midday Tuesday. The stock is now up 12 percent over the past two days, and some savvy traders are betting on even more gains for the beaten name.
"There have been about 50 percent more bullish bets than bearish [in the options market]," Mike Khouw said Monday on CNBC's "Fast Money." The semiconductor stock has been hit hard in recent months, falling more than 50 percent since the start of August. But according to Khouw, a flurry of bullish activity could spark a turnaround, at least in the very near term.
Khouw noted that the most active strikes on the day Monday were buyers of the January 52.50 calls for an average purchasing price of $5.50. Since buying a call allows one the right to purchase a stock at a set time and price, these are bullish bets that Ambarella will rise above $58 by January expiration. That's a more than 4 percent rally from the current price of around $55.60.