Schaeffer's Trading Floor Blog

Calls Popular as Skyworks Solutions, Inc. (SWKS) Bounces Back

Skyworks Solutions Inc (SWKS) traders are buying April calls

by 3/27/2015 1:50 PM
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Skyworks Solutions Inc (NASDAQ:SWKS) is roughly 4.7% higher at $97.43, erasing some of the losses from a semiconductor swoon earlier this week. Although the shares are still down more than 4% on the week, SWKS has been a technical outperformer, up 165% year-over-year and just off an all-time high of $102.77 on March 23. Some speculators are betting on SWKS to resume its journey to new highs in the next month, as call activity in the options pits is heating up.

In afternoon action, calls are changing hands at three times the average daily rate, and have nearly tripled puts in volume. Among the most active contracts are the April 92 and 96.50 calls, where potential buy-to-open activity has been detected. By purchasing these calls, traders expect the security to continue its push above the respective strikes through the close on Friday, April 17, when the options expire.

However, today's appetite for calls marks a change of pace in the options pits. Before today, puts had been more popular than usual, as SWKS' 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.46 stands in the 89th percentile of its annual range.

On the other hand, the brokerage bunch has been very optimistic on Skyworks Solutions Inc (NASDAQ:SWKS). Out of the 14 analysts covering the stock, 12 rate it a "strong buy" with the remaining two doling out ambivalent "hold" ratings. What's more, SWKS' average 12-month price target of $96.82 sits below current trading levels, implying that more bullish brokerage attention could be on the way.

Daily Chart of SWKS Since March 2014

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As Olin Corporation (OLN) Rallies, Option Bears Bet On a Pullback

Despite a new high, Olin Corporation (OLN) traders are buying April puts

by 3/27/2015 12:46 PM
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Olin Corporation (NYSE:OLN) is nearly 22% higher today to hit $33.17 -- and earlier touched a fresh record high of $34.34 -- after the firm announced it is buying most of Dow Chemical Co's (NYSE:DOW) chlorine business for approximately $5 billion. On the charts, today's jump brings the shares' year-to-date advance to an impressive 45.8%. However, some traders are skeptical of OLN's ability to sustain the momentum, as put activity is ramping up in the options pits.

Puts have been moving at 30 times the average intraday rate, though calls are still more popular on an absolute basis. The most active contract is the April 30 put, where it appears a decent portion of the activity is of the buy-to-open variety. Simply stated, these traders are gambling on the shares to breach $30 by the close on Friday, April 17, when the contract expires.

This spate of put buying runs opposite to the recent trend in the options pits -- over the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 779 calls have been bought to open for every put. Additionally, OLN's Schaeffer's put/call open interest ratio (SOIR) of 0.06 is the lowest such reading taken over the past year, showing that short-term speculators have never been more call-biased in the last 12 months.

Elsewhere, the brokerage bunch is lukewarm at best on Olin Corporation (NYSE:OLN), as 71% of covering analysts rate the stock a "hold" or worse. Furthermore, the security's consensus 12-month price target of $26.14 sits well below current trading levels, showing a high possibility for a round of price-target hikes and/or upgrades to create tailwinds.

Daily Chart of OLN Since March 2014

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Analyst Update: SanDisk Corporation, Esperion Therapeutics Inc, and Jazz Pharmaceuticals plc - Ordinary Shares

Analysts adjusted their ratings on SanDisk Corporation (SNDK), Esperion Therapeutics Inc (ESPR), and Jazz Pharmaceuticals plc - Ordinary Shares (JAZZ)

by 3/27/2015 11:33 AM
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Analysts are weighing in today on data solutions specialist SanDisk Corporation (NASDAQ:SNDK), as well as biopharmaceutical firms Esperion Therapeutics Inc (NASDAQ:ESPR) and Jazz Pharmaceuticals plc - Ordinary Shares (NASDAQ:JAZZ). Here's a quick look at today's brokerage notes on SNDK, ESPR, and JAZZ.

  • The fallout from yesterday's decreased revenue guidance is still affecting SNDK, as no fewer than eight brokerage firms reduced their opinion on the equity. Drilling down, the most dramatic cuts came from Wedbush and BMO -- to $56 and $61, respectively. After suffering its worst drop in five years yesterday, the shares of SanDisk Corporation are down 1.8% to hit $65.03 -- and earlier touched an annual low of $64.45 -- bringing the equity's year-to-date deficit to 33.7%. The brokerage bunch is still mostly bullish on SNDK, though, as 71% of covering analysts rate the stock a "buy" or better, with no "sell" or worse recommendations to be found. This leaves the door wide open for another round of negative analyst notes to pressure the shares even lower.

  • Citigroup started coverage on ESPR with a "buy" rating and a lofty $130 price target -- in uncharted territory -- sending the shares up 5.2% to hit $93.12. Digging deeper, the brokerage firm said ESPR's cholesterol-lowering drug is "an attractive asset for pharma to in-license or acquire." While Esperion Therapeutics Inc has dropped 21.7% from its March 19 record high of $118.95, the shares remain nearly 500% higher year-over-year. As such, the brokerage bunch is unanimously optimistic on the security, as all three covering analysts rate the stock a "buy" or better. Additionally, ESPR's average 12-month price target of $107.17 represents a 15% premium to current trading levels.

  • Citigroup also initiated JAZZ with a "buy" rating alongside a $195 price target -- in unexplored terrain. On the charts, Jazz Pharmaceuticals plc is up 2.1% at $177.09, bringing its year-to-date gain to 8.2%. In fact, JAZZ just tagged an all-time peak of $190.17 on March 19. Accordingly, sentiment in the options pits has been bullish, as JAZZ's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.70 stands in the 99th percentile of its annual range.

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Buzz Stocks: BlackBerry Limited, The Dow Chemical Company, and Orexigen Therapeutics, Inc.

Today's stocks to watch include BlackBerry Ltd (BBRY), Dow Chemical Co (DOW), and Orexigen Therapeutics, Inc. (OREX)

by 3/27/2015 9:30 AM
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U.S. futures are trading lower ahead of the open, with investors eyeing today's reading on gross domestic product (GDP) and a speech from Fed Chair Janet Yellen. Among the equities in focus are smartphone maker BlackBerry Ltd (NASDAQ:BBRY), science and technology giant Dow Chemical Co (NYSE:DOW), and biotech name Orexigen Therapeutics, Inc. (NASDAQ:OREX).

  • BBRY is making a strong push higher in electronic trading, after the company's fourth-quarter profit beat analysts' expectations. The shares are pointed 6.2% higher ahead of the open, as they try to gain back some of their 15.3% year-to-date deficit, following yesterday's close at $9.30. If BlackBerry Ltd can sustain this morning's momentum, the equity could be looking at additional upside, given the amount of pessimism surrounding it. For instance, put buying has picked up during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The stock's 10-day put/call volume ratio across these exchanges is 0.36 -- which lands in the 72nd percentile of its annual range. Elsewhere, nearly one-fifth of BBRY's float is sold short, representing over eight sessions' worth of trading, at normal daily volumes. A reversal of sentiment in and out of the options pits could give the security a spark.

  • DOW has gained 3.5% in electronic trading, after announcing it will sell most of its chlorine business to sector peer Olin Corporation (NYSE:OLN) -- in a transaction valued at roughly $5 billion. Dow Chemical Co finished yesterday at $46.44, and has now added nearly 11% since its 2015 low of $41.95 on Jan. 14. Still, analysts aren't sold on the equity just yet. Of the 18 brokerage firms covering DOW, 11 rate it a "hold" or worse.

  • OREX is poised to jump 7.6% out of the gate, after the company's obesity drug, Mysimba, was approved for marketing authorization by the European Commission. In the stock's options pits, OREX's Schaeffer's put/call open interest ratio (SOIR) of 1.01 rests at an annual high, meaning short-term speculators are more put-heavy now than at any other time during the past year. On the Street, analysts have taken a bullish stance. All six of the brokerage firms covering Orexigen Therapeutics, Inc. rate it a "buy" or better. OREX has done its best to live up to these expectations, adding 11.2% year-over-year, settling at $7.25 yesterday.

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Analyst Upgrades: Amazon.com, Inc., Yahoo! Inc., and Conn's, Inc.

Analysts upwardly revised their ratings on Amazon.com, Inc. (AMZN), Yahoo! Inc. (YHOO), and CONN'S, Inc. (CONN)

by 3/27/2015 9:30 AM
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Analysts are weighing in on e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN), Internet issue Yahoo! Inc. (NASDAQ:YHOO), and consumer products specialist CONN'S, Inc. (NASDAQ:CONN). Here's a quick roundup of today's bullish brokerage notes on AMZN, YHOO, and CONN.

  • In the wake of yesterday's raft of fundamental developments -- including reports of a possible buyout target -- AMZN saw its price target lifted to $430 from $405 at Citigroup, representing expected upside of 17% to last night's close at $367.35, and a move into uncharted territory. Separately, the firm announced a new partnership with LiveDeal Inc (NASDAQ:LIVE) this morning. Technically speaking, the shares have put in a strong performance in 2015, boasting an 18.4% lead. What's more, although the stock has succumbed to this week's broader tech sell-off, it seems to have found a foothold atop its rising 10-week moving average. In the options arena, speculators have shown a preference for long calls over puts in recent months. Specifically, Amazon.com, Inc.'s 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.25 ranks in the 70th annual percentile.

  • YHOO is up nearly 2% in electronic trading, after news of a $2 billion stock buyback -- which comes as the company prepares to spin off its stake in Alibaba Group Holding Ltd (NYSE:BABA) -- was met with an "overweight" initiation and $55 price target at Morgan Stanley. As a point of reference, YHOO hasn't seen the north side of $55 since September 2000, and settled last night at $44.47. It's been a rough year for the stock, which is down around 12%. Against this backdrop, option traders have taken a skeptical stance. At the ISE, CBOE, and PHLX, YHOO's 50-day put/call volume ratio of 0.37 rests 1 percentage point from a 52-week peak. Additionally, Yahoo! Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 0.64 arrives in the 96th percentile of its annual range, meaning short-term speculators have rarely been more put-heavy.

  • Piper Jaffray weighed in on CONN -- which is slated to step up to the earnings plate next week. Specifically, the brokerage firm boosted its rating to "overweight" from "neutral," and lifted its price target to $38 from $20, saying the company's stable portfolio is likely to result in strong earnings-per-share upside. The stock has had a standout year, rallying almost 52% to its current perch at $28.39 -- and the equity appears to be poised to continue this momentum today, with CONN'S, Inc. up almost 6% ahead of the bell. Short sellers may be on the verge of capitulating, which could help fuel the security's fire. Short interest accounts for 35.8% of the stock's available float, and it would take more than two weeks to cover these shorted shares, at average daily trading levels.

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