Semiconductor stocks keep surging even as trade tensions between the U.S. and China begin to ratchet up once again.
The SMH ETF that tracks the space was up nearly 3% on Wednesday, bringing its total advance over the last month to about 16%. These gains come despite increasing scrutiny on chipmakers and other technology companies based in Asia, which some investors expected to stall the space's rally.
Instead, bullish options traders are pouring into names based stateside, Michael Khouw, chief investment officer at Optimize Advisors, said Tuesday on "Fast Money."
"Texas Instruments traded more than four times its average daily call volume, and that was the result of a large trade in the September 120-calls," said Khouw. "A trader bought over 8,700 of those, paying an average of $9. That's obviously making a bullish bet that Texas Instruments will exceed that $120 strike price by at least the $9 that they paid."
As Khouw would explain, this bet could potentially be worth more than $105 million in Texas Instruments stock upon September expiry, but the trade could also be worth plenty to this trader right now.
Those 120-calls that this trader bought on Tuesday for $9 were trading for about $13.65 in Wednesday's session, thanks to Texas Instruments' stock jumping about 4% higher. That means, if this trader was so inclined, they could collect a profit of about $4.65 per contract on 8,700 of these call contracts, netting them about $40,000 in total gains.