What’s Up With Verigy?

Call option volume for Verigy (VRGY) was significantly up yesterday, and there does not appear to be any related news. Verigy announced on October 6 that it was providing its high speed memory system product to ISE Labs, good news, but good enough news to spark large call option volume? Also of note, Verigy’s stock price closed unchanged yesterday, even with all of the interest in its call options.

Verigy provides advanced semiconductor test systems. The company’s products encompasses test for system-on-chip, high speed memory and multi-chip packaging. Verigy’s competitors include Advantest (ATE), LTX-Credence (LTXC) and Teradyne (TER). Verigy’s stock price has been trading in a range between $10 and $13 for the last five months. Verigy’s stock price is up almost 100% from its march low.

The extremely large call option volume for Verigy yesterday was concentrated in the 2010 Jan 10, 12.50 and 15.00 call options. The Jan 10 call option is in-the-money and the other two call options are out-of-the-money. There was very little corresponding volume for the put options, so this is a very bullish indicator.

A covered call investing position for Verigy for November looks interesting with a potential return of 4.7% and with 44 days to expiration. The call option to sell would be the November 10 with ticker symbol UHGKB.

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To enter the covered call investing position an investor would purchase the stocks in multiples of 100 shares and sell one call option for each 100 shares of stock purchased.

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[tags] high speed memory, ISE Labs, semiconductor test, system-on-chip, high speed memory, multi-chip packaging, out-of-the-money, bullish, TER, Teradyne Inc., VRGY, Verigy Ltd. [/tags]