Huge Options Activity in Cypress Semiconductor Corporation (CY)

Cypress Semiconductor Corporation (CY) is a semiconductor producer based in San Jose, CA. At the time of this writing (11:40AM CST), CY is currently trading at 13.66, up 0.89% on the day and just under 0.10 off of the 52 week high of 13.73 that printed earlier this morning. CY continues to see huge bullish momentum following a December 2nd announcement that its proposed merger with fellow semiconductor and microcontroller producer, Spansion Inc. (CODE), would be moving forward.

Earlier today we saw some very unusual option activity in CY that would indicate traders are positioning themselves for continued upside in this merger-play name. At around 10:30AM CST, an extremely large order in the January ’15 14.0 strike calls crossed the tape, lifting the offer on over 24,000 contracts against a comparably modest open interest of just under 850. This initial opening order represents a cash outlay of approximately $1,063,304 pre-commission, and certainly originates from a trader not short on confidence in the continued upside prospects in CY. Moments later, another smaller order came in and bought up over 1,900 more of the same contracts at an ask price of 0.50 representing another cash outlay of just under $100,00 pre-commission. I am looking to follow the order flow in CY today, and will be getting long this name, looking for more merger-fueled upside over 14 going into the New Year.

Trade: I bought the CY Jan 14 Calls for $0.50
Risk: $50 per 1 lot
Reward: Unlimited
Breakeven: $14.50