Bulls call in their $SMH chips

Chip bulls are seeing their bets be rewarded today in upside call positions on the VanEck Vectors Semiconductor Fund (SMH).

On Jun. 25, Market Rebellion’s Unusual Option Activity Service identified the purchase of 5,900 July $267.50 calls for $4.75 to $5.94 as part of a bullish spread with shares at $257.92. This represented fresh buying, as volume was well above the strike’s previous open interest of 191 contracts.

Those calls have sold for as much as $11.55 today, a 94.44% return, while the stock rose 6.84% in the same time period, underscoring how options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

SMH was last up 1.36% on the day at $273.38