Call options are unusually active today on Atmel Corporation (ATML - 8.22), with approximately 24,000 of these bullishly oriented contracts crossing the tape by midday. For comparison, ATML typically sees only 2,320 calls change hands on an average day. Meanwhile, only 342 puts have been exchanged so far.

Taking a closer look at the day's major block trades, it looks as though a single spread strategist is responsible for the bulk of the volume. Earlier today, a block of 10,000 contracts traded on ATML's January 2012 12.50-strike call at the bid price of $0.15 -- suggesting they were sold. Simultaneously, a matching block of 10,000 January 2012 10-strike calls were exchanged at the ask price of $0.65, implying they were purchased.

In other words, this appears to be a long call spread, or debit spread, on ATML. By purchasing the 10-strike calls, the trader is looking for ATML to rally into double-digit territory by the time January-dated options expire. However, by selling the higher-strike calls, the speculator is revealing that she doesn't expect unlimited upside over the intermediate term.

This particular spread was opened for an initial net debit of $0.50, which means the speculator will begin seeing profits if ATML should climb north of $10.50 per share. The most the trader can possibly gain is limited to the difference between the two strikes, less the initial net debit -- in this case, $2.00. The spread strategist may collect this maximum gain if ATML settles at or above $12.50 upon January expiration.

However, the best-case scenario would be a photo finish right at $12.50. This would reap the largest possible profit on the position, while the sold calls could be left to expire worthless (thereby dodging any brokerage fees involved in a buy-to-close operation).

So, while the trader effectively lowered her breakeven and her initial net debit by selling those 12.50 calls, she also put a very concrete cap on her profit potential. If she had simply purchased the January 10 calls, she could capitalize on theoretically unlimited gains in the underlying equity.