The room for half-judges pulled back a bit on Thursday to the SMH ETF which follows the sector on a full close all Wednesday, but the options market bets that Applied Materials’ revenue report could help pull the chips to yet another record.
Applied Materials has not performed as well as many of its competitors before competition, and won just 7% this year compared to the 20% rise of the semiconductor index. The company is scheduled to report profits after the clock Thursday. Despite the relative weakness betting many options traders this is the perfect time to play catch up.
“Outpaced calls place more than 2 to 1 above above average volume. The options market currently implies a movement of 4.6%, which is in line with the 4.1% or so that the stock has averaged over the last eight quarters , “Michael Khouw, chief investor of Optimize Advisors, said Wednesday about” Fast Money. “
A 4.6% increase from Wednesday’s close would put Applied Materials right above $ 69.56, which is slightly higher than what the most popular options contract of the day was targeting for the stock.
“Where we saw a lot of that activity were buyers of the [August 14] Weekly 65/67 call spreads, “said Khouw,” that’s a $ 2 wide spread spread, they spent about $ 1 on those spreads, so those are Bullish bets, they basically risk a dollar to make a dollar as revenue come out to be positive. “
Applied Materials was 1.9% lower in Thursday’s session.
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