Susquehanna notes heavy call buying in DRAM Memory ETF stock

Investing.com - Investors purchased roughly 90,000 out-of-the-money January 60 calls in the DRAM Memory ETF on Monday, according to Susquehanna, as the fund posted a 4% rally. The majority of the contracts traded at an average price of around $1.93, the firm said.

The call buying followed a November 1x1.5 call spread purchase on Thursday and a larger January 2027 1x2 call spread purchase in the SOXX semiconductor ETF. Major indices posted gains Monday, with the SPY rising roughly 40 basis points and the QQQ rebounding about 1.2%. The SMH semiconductor ETF gained approximately 1.6%.

DRAM implied volatility remains near the lower end of levels seen since the options were listed earlier this year, Susquehanna said. At-the-money implied volatility has risen a couple of points compared to earlier in October, but 20% out-of-the-money call volatility has declined.

Skew has shifted away from upside calls and toward downside puts as momentum faded and the ETF sold off. Upside calls are now cheaper despite the sell-off, even as at-the-money options have become more expensive, the firm noted.

Monday's upside call buyer takes advantage of the decline in call skew through the purchase, Susquehanna said. The firm previously noted that call spread buyers appeared to be purchasing lower strike calls for limited-risk upside exposure while financing that with sales of higher strike calls.

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