The Wall Street Journal-20080131-Rambus Traders Show Hope

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Rambus Traders Show Hope

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Options activity on Rambus Inc. shows traders are looking for a near-term rise on the latest legal developments, but the long-term prospects are less certain.

In trading on Nasdaq, shares of the Los Altos, Calif., memory-chip maker were up 18% to $19.44 as the latest court case against South Korea's Hynix Semiconductor Inc. gears up in San Jose. A win could yield royalties of as much as $10 billion, covering all global sales, to as little as $700 million, for only U.S. sales.

"I'm surprised that [for] a trial that has been known about for so long . . . it would take [until] now to wake up to the significance," said Michael Cohen, an analyst at research firm Pacific American Securities.

The wide-ranging possibility was reflected in Rambus shares. Nearly 55,500 calls traded against 12,850 puts, suggesting a more bullish sentiment. But longer term, there are contrarians: Nearly 3,300 August 20 calls changed hands, suggesting traders are looking for shares to fall below $20 by August.