Today we’re seeing interesting options activity in Atmel (ATML), a mid cap semiconductor company whose options normally trade by appointment. Almost the entire options open interest has traded today, predominantly in the form of calls. When the stock was $8.97 shortly after the open, a buyer swept multiple exchanges and bought 7500 August 10 calls for 25 cents. 16,000 have now traded on the day.
What sticks out is how cheap options in the stock were prior to today’s bullish action with 30 day at the money Implied Vol just a few points off of the multi-year lows:
Today’s buying has caused a spike in vol making long premium trades far less attractive. 30 day at the money vol is now up more than 30% from the recent lows:
From a technical perspective, the stock just brought out to new 2 year highs, and has little overhead resistance, until $10/$11:
The buyer of the calls needs the stock more than 10% higher by August expiration just to break even but a runaway breakout means unlimited profit potential above that. This will be a fun one to keep an eye on.