Bulls Bet Manufacturer Will Catch Up with Chip Sector

Applied Materials has not kept pace with recent strength in the semiconductor space, but yesterday's (Tuesday) activity was bullish on the chip equipment maker.

The May 16 calls were the most interesting contracts, trading more than 11,000 times with large blocks pricing for $0.20 to $0.22. The May 15 calls and May 15 puts were also high on OptionMonster's tracking systems, though volume was below open interest in both.

AMAT shares, which hit a 2011 high near $17 in early March, rose 2.03 percent to $15.61 yesterday and is up 6 percent in the last week.

Still, that's less than the move of names such as Intel or even the Semiconductors HOLDRS exchange-traded fund, which tracks the broader chip sector.

More than 27,000 contracts traded in Applied Materials yesterday versus its daily average of about 5,000. Calls outnumbered puts by more than 3 to 1, a further bullish indication in light of the broader sector's strength.


Najarian has no positions in AMAT.

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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.