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The $1 million bet on a semiconductor stock

Semiconductor producer Cypress has had a rough year, with the stock falling more than 30 percent in 2015. However, one trader is betting big that the company sees a bounce in the first half of the new year.

On Monday, a trader bought 31,000 June 11/13 call spreads for 33 cents each, a $1 million bet that Cypress is above $11.33 by June expiration. Cypress shares rose almost 4 percent on Tuesday to nearly $9.90.

"This is a space [where] there was $100 billion in announced acquisitions just this year, and Cypress Semi was actually an acquirer," Dan Nathan of RiskReversal.com said Monday on CNBC's "Fast Money."

Cypress completed its merger with chipmaker Spansion in March 2015, and expressed interest in purchasing several other companies this year. Now, Nathan said traders may be betting that Cypress itself could be acquired.

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"I suspect this [trade] is leveraging a long position, maybe an owner of the stock thinking that this company that was once the acquirer could become an acquiree," he said.

Recently analysts have expressed concerns over lagging demand and a slow macro environment. However, the average analyst target for Cypress is above $13, according to FactSet.

"While current muted demand trends indicate that forward estimates may still be at risk, we like the Cypress' risk/reward given a 4.4 percent dividend yield, insider buying by CEO T.J. Rodgers and ongoing Spansion cost synergies," John Vinh of Pacific Crest Securities wrote in November.

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