Shares of semiconductor company Photronics Inc (PLAB) have been generally moving higher over the past few months, but with some volatile spikes in shares. One trader sees the potential for a further move higher.
That’s based on the December $12.50 calls. With 155 days until expiration, over 4,273 contracts traded, a 36-fold rise in volume from the prior open interest of 117. The buyer of the calls paid $1.92 on average to make the trade.
With shares near $13, the calls are slightly in-the-money. As long as shares trend higher, the option should continue to gain value.
The semiconductor company has seen shares trade as high as $14.50 in the past year, with those highs being set in early June. This looks like a trade being held for a further rally in shares in the coming weeks rather than in the hopes of hitting a new 52-week high.
Action to take: Shares have a history of dropping to near their 200-day moving average, as happened in the past week, before bouncing higher. Investors could certainly buy shares around $13 looking for a new high over $14.50 in the coming months.
For traders, the $12.50 calls are already in-the-money and have ample time for the new uptrend to play out. Traders can likely nab mid-to-high double-digit gains, possibly even more if shares break to new highs in the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may make a trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.