Semiconductor inspection and metrology equipment producer Camtek (CAMT) is up over 307% in the past year amid surging interest in chip stocks. One trader sees shares trending even higher over the next few months.
That’s based on the November $135 calls. With 127 days until expiration, 5,050 contracts traded compared to a prior open interest of 122, for a 41-fold rise in volume on the trade. The buyer of the calls paid $18.86 to make the bullish bet.
Camtek shares recently traded for about $137, meaning the option is already about $2.00 in-the-money. It should head higher with a further price increase in Camtek.
Camtek sits right near its 52-week high of $140.50, and have nearly doubled since April.
Operationally, Camtek has seen revenues rise by 34%, and earnings are up by 44%. That’s lagging the share price appreciation, however, which has taken the stock to about 77 times earnings.
Action to take: Shares have become a momentum play at this point. They could see further upside ahead, but could also be suspect to a steep drop given their recent steep gain. Investors should look to exit at the first sign of trouble.
For traders, the November $135 calls could see mid-double-digit returns on a further move higher in shares. And if there is the start of a pullback, starting in-the-money should help avoid a loss.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.