Traders Bullish on Applied Materials on Expected Rally

Options action turned bullish on Applied Materials yesterday as investors bet that it would rally into the autumn.

Volume in the October 14 calls rose to 11,744 contracts, more than twice existing open interest, according to OptionMonster's tracking systems. The calls traded for $0.60 to $0.80, with purchases dominating the activity.

Applied Materials fell 1.89 percent to $13.48 yesterday. The provider of semiconductor-making equipment has stalled this month, falling 2.3 percent after a 25 percent rally in July.

The stock needs to climb 9.8 percent by expiration for the calls to turn a profit. The company's fiscal third-quarter results surprised to the upside on Aug. 11, and management forecast better-than-expected numbers for the following quarter.

Options volume in Applied Materials was almost double the usual level yesterday. Calls exceeded puts by 5 to 1.


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David Russell is a reporter and writer for OptionMonster.