Unusual Options Activity: Photronics Inc (PLAB)

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.

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  • 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.

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  • 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.