Schaeffer's Trading Floor Blog

Traders, Analysts Skeptical of Texas Instruments Incorporated (TXN)

TXN has attracted bearish attention in the options pits and on Wall Street

by 1/30/2014 1:38 PM
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Put buyers have displayed an unusually strong affinity for Texas Instruments Incorporated (NASDAQ:TXN) in recent sessions. At the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE), the semiconductor concern has seen 12,242 puts purchased to open in the last week, compared to just 593 calls -- resulting in a brow-raising five-day put/call volume ratio of 20.64.

Accounting for 10 sessions' worth of information -- as well as data from the NASDAQ OMX PHLX (PHLX) -- yields a still-high put/call volume ratio of 3.54. Of significance is the fact that this ratio sits higher than three-quarters of similar readings recorded in the last year. In other words, traders have scooped up TXN puts (relative to calls) at a faster-than-usual rate. Currently, peak front-month put open interest resides at the slightly in-the-money 43 strike, which is home to 11,607 contracts -- many of which have been bought to open in recent weeks.

Texas Instruments bears aren't confined to the options pits, either. In fact, of the 26 analysts covering the shares, 20 have given the stock a rating of "hold" or worse, versus a mere six "strong buy" recommendations. Similarly, the Street's consensus 12-month price target for TXN is $43.07 -- just a chip-shot away from the current share price of $42.89.

Daily Chart of TXN since October 2013

On the charts, Texas Instruments Incorporated (NASDAQ:TXN) has performed well on a long-term basis, advancing by over 30% year-over-year. However, the shares have been trapped in the $42-to-$44 area since late October, and since briefly exiting this range to hit a nearly 13-year high of $44.82 last week, have shed 4.3%.

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