Last week, I noted heavy call activity in MEMC Electronic Materials (WFR) that was notable enough to lure me into buying. Today, WFR continued its impressive recovery from an earnings warning with an 8% one-day pop giving it a 17% run since the close following warning. Briefing.com attributed today’s trading to takeover speculation.
Whatever the reason for the pop, trading is aggressive with options kicking into high gear again. Over 20,000 calls have traded across September strikes from 17 to 20 versus 22,376 contracts in open interest. This compares to a lowly trading volume of just over 2000 put contracts across the same strikes.
I was not patient enough to profit from today’s move as I sold my calls yesterday. Given the aggressive bullish nature of the trading following an earnings warning, I have to believe WFR remains a stock to watch this week.
On a related note, it seems that speculative fervor has kicked into a higher gear this week with lots of stories and reports of high options trading, rumors galore, and large one-day moves in stocks, especially those with short interest. It will be interesting to see whether we experience a serious hangover after this week’s expiration of September options.
Be careful out there!
Full disclosure: no positions