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Applied Materials, Inc. (NASDAQ:AMAT) opened today's session at a new five-year high of $19.71, but was last seen 0.7% lower at $19.50. Taking a step back, the shares are up 45% on a year-over-year basis. Not surprisingly, traders in the semiconductor name's options pits have been upping the bullish ante of late.
Specifically, at the Chicago Board Options Exchange (CBOE), AMAT has racked up an astonishing five-day call/put volume ratio of 259.62, with nearly 260 calls bought to open for each put during the last week. On a similar note, the stock's 50-day International Securities Exchange (ISE), CBOE, and NASDAQ OMX PHLX (PHLX) call/put volume ratio checks in at 8.57 -- just 11 percentage points from a 52-week peak, signaling option bulls have been more active than usual in recent months, relatively speaking.
Digging deeper, mid-term traders have taken aim at AMAT's out-of-the-money July 20 call, which is home to more than 26,000 contracts, a number of which were bought to open in recent months. In other words, these individuals expect the stock to muscle north of $20 in the next four-plus months, by the option's expiration at the closing bell on Friday, July 18. Looking back, the shares haven't explored that territory since June 2008 -- though the mark is just 2.6% away from Applied Materials' current perch.
Outside of the options pits, pessimism reigns. On Wall Street, nine out of the 16 firms covering AMAT have given it a "hold" or "sell" rating; plus, the stock's 12-month price target of $18.79 represents a discount to the current price. Elsewhere, short interest rose by nearly 37% during the last two reporting periods, and now makes up 5.2% of the equity's available float, suggesting a portion of the activity at the July 20 call could be the result of shorts hedging against a continued rise.
However, this negative sentiment picture could change quickly, based on Applied Materials, Inc.'s (NASDAQ:AMAT) aforementioned technical strength. Should covering analysts change their opinions on AMAT, or the shorts be forced to cover their bearish bets, it could add contrarian fuel to the security's fire.