Options Traders' Darling: Chip Equipment Shares

Chip equipment maker Teradyne has been pummeled along with the rest of the semiconductor industry, but is trading more than 7 percent higher today — and is attracting options players as the company approaches its earnings report next week.

OptionMonster's tracking systems have lit up with the TER 5 strike calls traded across multiple months. But the most activity is not at the near-month February 5 strike, but instead at the April 5 calls, where 8,000 contracts have traded against open interest of 1,899.

Institutional buyers have stepped up and bought those April calls at prices of $0.55, $0.60, and $0.65. Teradyne stock still trades below book value even with today's rise and, as with any pullback, traders have become more interested in TER options ahead of the quarterly report Wednesday after the market closes.

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Pete Najarian is a professional investor, CNBC contributor, Fast Money regular, and cofounder of OptionMonster.com.