Schaeffer's Trading Floor Blog
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The major market indexes are modestly higher this afternoon, as Wall Street weighs the latest M&A updates. Meanwhile, among the equities in focus are semiconductor concern Micron Technology, Inc. (NASDAQ:MU), oil-and-gas company Chesapeake Energy Corporation (NYSE:CHK), and in-flight wireless issue Gogo Inc (NASDAQ:GOGO), which have all attracted the attention of analysts.

  • MU is up 3.5% at $26.93, thanks to a nod from RBC ahead of the bell. Specifically, the brokerage firm upgraded MU to "outperform" from "sector perform," lifted its price target to $34 from $27, and called the stock "a longer-term play on the favorable changes in the memory industry." The shares have muscled 23.5% higher in 2014, and have rallied more than 130% on a year-over-year basis. Nevertheless, options buyers are picking up Micron Technology, Inc. puts over calls at a faster-than-usual pace, either to bet on or hedge against a pullback. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.39 stands just 15 percentage points from an annual high. Whatever the motive, now is an opportune time to speculate with MU's short-term contracts, as the security's Schaeffer's Volatility Index (SVI) of 37% rests just 7 percentage points from a 52-week low, suggesting the stock's front-month contracts are attractively priced, on a historical basis.

  • CHK has tacked on 1.3% to $28 so far today, thanks to a trio of upbeat analyst notes. Ahead of the bell, Jefferies raised its price target on CHK to $35 from $31, and Global Hunter Securities lifted its price target to $38 from $31. KLR Group, meanwhile, hiked its price target by $4 to $37, and upgraded the stock to "buy" from "accumulate." On Friday, Chesapeake Energy Corporation was the worst-performing S&P 500 Index (SPX) member, surrendering 4.7% on the company's reduced output forecast and plans to spin off its oilfield services unit. However, the stock remains more than 3% higher year-to-date, and short-term options players are optimistic. The equity's Schaeffer's put/call open interest ratio (SOIR) sits at a 52-week low of 0.28, implying that short-term speculators haven't been more call-biased during the past year.

  • Finally, GOGO has rallied 8.6% to $14.85, after UBS upped its rating to "buy" from "neutral." "We believe Gogo's competitive advantages include its brand, ownership of all 4 MHz of U.S. ATG spectrum, and the visibility associated with long-term carrier contracts," the brokerage firm said in a note. On the charts, GOGO has underperformed the broader SPX by more than 33 percentage points during the past three months, and maintains a year-to-date deficit of 40.6%. As such, short interest jumped 24% during the past two reporting periods, and now accounts for more than 30% of the stock's total available float. Should Gogo Inc extend today's upward momentum, an unwinding of bearish bets could translate into added upside for the shares.

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