Interest in National Semiconductor Corp (NSM) appears to be picking up. At least in the option pits. A look to the option chain shows a little more than 4000 contracts of the May 10 call have traded so far today. According to data from Trade Alert and Fred Ruffy [free registration required], the bulk of the trades look to be opening buy orders.

A look to the put/call ratio shows that optimism here is nothing new. Call open interest has outpaced put open interest for some time and pushed the ratio to an annual low.

From the contrarian point of view, this enthusiasm is somewhat concerning when you consider the chart below. On the bright side, the stock has been able to stabilize after sliding steadily lower for the last half of 2008. However, there has been little in the way of any sort of sustainable bounce.

In situations like this, I would be more inclined to wait for the stock to show signs of life before getting excited about a turnaround. After big declines, it is not uncommon for stocks to enter a basing phase, which can last for months or more.

Chart Courtesy of Thomson Financial