CREE – Cree, Inc. – September contract call options on the manufacturer of semiconductor materials and devices are very active this morning. It looks like a number of call traders are initiating bullish stances on the stock even though Cree’s shares fell as much as 2.05% in morning trading to an intraday low of $55.33. The company is reportedly scheduled to present at Citigroup’s 17th annual Global Technology Conference today. Options players picked up roughly 1,600 calls at the September $57.5 strike for an average premium of $1.62 each. Investors long the calls make money if Cree’s shares rally 6.85% over today’s low of $55.33 to trade above the average breakeven point at $59.12 by September expiration. Optimism spread to the higher September $60 strike where some 1,500 calls were coveted at an average premium of $0.86 a-pop. Traders holding these contracts are poised to profit should CREE shares increase 10% in the next couple of weeks to exceed the effective breakeven price of $60.86 by expiration day. Finally, bulls picked up another 1,600 calls at the September $62.5 strike for premium of $0.44 apiece. Call buyers make money if the semiconductor maker’s shares surge 13.75% to surpass the average breakeven point to the upside at $62.94 ahead of September expiration. Increased investor demand for options on Cree, Inc. helped lift the overall reading of options implied volatility on the stock 11.5% to 54.14% as of 11:55 am ET.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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