Players grab Rambus calls before injunction ruling

By Doris Frankel

CHICAGO (Reuters) - Option speculators on Wednesday were betting on more gains in the stock of memory chip technology designer Rambus Inc (RMBS.O: Quote, Profile, Research, Stock Buzz), a move that could be related to an expected injunction ruling in its patent litigation.

Rambus shares rose 3.45 percent, or 57 cents, to $17.07 on the Nasdaq after hitting a session high of $18.03.

The activity in Rambus options was heavy. The trading volume was five times the daily level as about 70,000 calls, which give the right to buy the stock at a given price and time, and 25,000 puts, which give the right to sell the stock at a specified price and time, changed hands, according to option analytics firm Trade Alert.

"There is significant option volume in Rambus. It appears to be (investors) positioning for a move higher, possibly

in anticipation of a favorable court ruling regarding an injunction against Hynix Semiconductor," said strategist Frederic Ruffy at Web information site WhatsTrading.com.

In one transaction, it looked as though option players were betting on a move past $20 by mid-August, requiring a 16 percent gain in Rambus shares by that time, said Interactive Brokers Group equity options analyst Rebecca Engmann Darst.

This may have been funded by the selling of 15,000 lots of the November $20 strike calls to purchase 15,000 contracts of the near-term August $20 strike calls in what was viewed as a calendar spread, she said. This could be earnings related since it coincides with the buying of August calls.

"A trader will do this if there is an anticipation of an event that would drive the closer-month volatility higher," she said.