Round-Number Calls Active On Integrated Device Technology Inc (IDTI)

Integrated Device Technology Inc toppled $20 for the first time in nearly 11 years

by Karee Venema

Published on Dec 16, 2014 at 2:34 PM
Updated on Apr 20, 2015 at 5:09 PM

Integrated Device Technology Inc (NASDAQ:IDTI) rallied to $20.15 earlier -- its loftiest perch since January 2004 -- but was last seen lingering near $19.69. Option traders, however, are betting on the stock to rally back above this round-number mark over the next five weeks, by buying to open the January 2015 20-strike call, which is easily IDTI's most active option.

Should the stock fail to topple the strike by January options expiration, the most the speculators stand to lose is the initial premium paid. However, it appears these traders are willing to pay up for their bullish bets. Specifically, implied volatility on the January 2015 20-strike call is inflated relative to the security's 30-day historical volatility (56.7% vs. 36.1%), meaning premium is relatively expensive at the moment.

Technically speaking, the stock has been a standout in 2014, and has nearly doubled in value. More recently, Integrated Device Technology Inc (NASDAQ:IDTI) has put in a stellar performance against the S&P 500 Index (SPX), outpacing the broad-market barometer by nearly 38 percentage points over the past two months.

Daily Chart of IDTI Since January 2014

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