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Despite the broad-market trend lower, TriQuint Semiconductor (NASDAQ:TQNT) -- a chip provider for Apple Inc. (NASDAQ:AAPL) -- is up 1.6% to $8.27 on strong iPhone 5S sales. Earlier, the stock even hit a 2-year high of $8.49. Meanwhile, in TQNT's options pits, traders are betting from both sides of the fence, with overall volume at about six times what's expected. Attracting the most attention is the November 9 call.
Volume at the aforementioned strike sits at over 1,600 contracts, 82% of which traded at the ask price, suggesting they were mostly purchased. Based on rising implied volatility (IV) and information from the International Securities Exchange (ISE), it also appears that at least some of the bets were freshly minted at a volume-weighted average price (VWAP) of $0.35.
That being said, for today's bullish traders to profit, they need TQNT shares to muscle past $9.35 (strike price plus VWAP) by the close on Nov. 15. Delta on the option is 0.32, or 32%, so the chances of the call finishing in the money are about 1-in-3. If the shares stall short of the strike -- which hasn't been surmounted since July 2011 -- the speculators risk losing no more than the premium paid. Some of these speculators, in fact, might be short sellers looking to hedge their bearish bets in the wake of today's pop higher. At the stock's average daily volume, it would take more than eight trading days to cover all of the existing shorted positions.
Either way, premium is relatively cheap on short-term TriQuint Semiconductor (NASDAQ:TQNT) options right now. After all, Schaeffer's Volatility Index (SVI) for the stock rests at 33%, which is lower than all but 9% of the readings recorded within the past 12 months. However, bargain prices may soon be a thing of the past; the stock's 30-day, at-the-money IV was up 4.3 percentage points, or 13.2%, at last check.
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