Chipmaker Sees Options Upside After a Strong Sector Report

Applied Materials is seeing upside options activity after a strong sector report and ahead of two industry conferences, including one that opens today.

OptionMonster's tracking systemsdetected 29,511 calls trading at AMAT's December 13 contracts in a strong buying pattern yesterday for $0.20 to $0.40. That volume dwarfed the daily call average of 1,395 at the strike and was nearly double the open interest of 15,631 contracts.

The chipmaking equipment company rose 4.71 percent yesterday to $12.89. The sector in general fared well after the Semiconductor Industry Association released a positive report on the industry Monday and chipmaker Altera raised its outlook yesterday. Shares of chip companies and other tech names may move again if there is any news from the Credit Suisse Technology Conference today and the Barclays Capital Global Technology Conference next week, on Dec. 9.

Applied Materials shares need to rise roughly between 2.5 percent and 4 percent at minimum to turn a profit for the December 13 calls purchased yesterday. Overall calls in the name outnumbered puts by more than 7 to 1, a potential indication of further bullish sentiment.


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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.