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Put players have not been shy about making their presence known in Freescale Semiconductor Ltd's (NYSE:FSL) options pits of late. During the course of the past five sessions, in fact, traders at the International Securities Exchange (ISE) have bought to open 3,734 puts on FSL, compared to just 40 calls.
This growing bearish bias is also evident when including data from the Chicago Board Options Exchange (CBOE) and NASDAQ OMX PHLX (PHLX) -- and extending the time frame to 10 weeks. Specifically, the equity's 50-day ISE/CBOE/PHLX put/call volume ratio has grown to 1.55 from its April 1 reading of 0.11, and the current ratio ranks in the 98th percentile of its annual range. Simply stated, puts have been bought to open over calls at a near-annual-high clip in recent months.
Looking at the soon-to-be front-month series, peak put open interest can be found at the May 24 strike, where 7,692 contracts are currently in residence. A number of these positions have been bought to open in recent weeks, meaning traders are potentially pleased with today's 0.9% drop, which has brought Freescale Semiconductor south of the strike price.
However, this bearish bias isn't confined to the options arena. Short interest, for example, accounts for a healthy 13.9% of the stock's available float, representing more than six sessions' worth of pent-up buying demand, at the average daily volume. Meanwhile, the consensus 12-month price target of $24.53 stands at a slim 2.4% premium to FSL's current perch at $23.95. However, it appears analysts may be changing their tune, as just yesterday Topeka Capital upped its price target for the equity to $30 from $23.
From a contrarian perspective, such bearish sentiment levied toward an outperforming equity could have bullish implications down the road. In fact, FSL has rallied more than 49% in 2014, and has outpaced the broader S&P 500 Index (SPX) by more than 47 percentage points over the past three months. Assisting the stock in its trek higher has been its 40-day moving average. This trendline helped usher FSL to a record high of $26 on April 3, and more importantly, is containing today's pullback.
Additionally, the company is slated to report earnings after next Thursday's close. Following its last quarterly report in late January, shares of the semiconductor concern rallied nearly 15% the subsequent day. Another well-received earnings report for Freescale Semiconductor Ltd (NYSE:FSL) could shake some of the weaker bearish hands loose, creating a fresh wave of buying power for FSL.