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Option Activity Alert: Silicon Laboratories

Option traders bet against Silicon Laboratories (SLAB) with a tidal wave of put buying

by Elizabeth Harrow (eharrow@sir-inc.com) 11/13/2007 12:48 PM

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Silicon Laboratories (SLAB: sentiment, chart, options) attracted the attention of some bears yesterday, as option traders showed a distinct preference for SLAB put options on the International Securities Exchange (ISE) Monday. By the end of the trading day, SLAB scored one of the highest single-day put/call ratios on the exchange, checking in with a reading of 1,163.0. Specifically, traders bought 1,163 put options on the ISE yesterday, compared to just 1 call option that was bought to open.

This wave of put buying came in the wake of a Silicon Labs report that the company has introduced the first fully-integrated AM/FM radio receivers with short-wave and long-wave band coverage � hardly the kind of dire news you would expect to spark such bearish activity. Nevertheless, the stock finished on a loss of nearly 3% yesterday, extending a streak of daily closes on the south side of its 10-day and 20-day moving averages.

As a result of yesterday's put-oriented trading on the ISE, the stock's Schaeffer's put/call open interest ratio (SOIR) crept up from 0.93 to 0.96 overnight. The new reading ranks higher than 91% of other such readings taken during the past year, indicating relatively extreme levels of pessimism from option traders.

In the soon-to-expire November series, SLAB is facing a wall of overhead call interest. A total of 9,837 contracts lie in residence at the out-of-the-money November 40, 45, and 50 strikes. The trend continues in the December and January series, where the 45-strike call option reigns as the most popular.

Unfortunately for SLAB, put traders are favoring in-the-money options. In the November, December, and January series, the in-the-money 40-strike call is home to peak put open interest. Meanwhile, out-of-the-money put open interest is very minimal in the front 3-months' series, which means that SLAB can't count on structural support from out-of-the-money put contracts.

However, the shares aren't totally without support. The stock's 10-week and 20-week trendlines have combined to boost the equity since mid-April 2007, and these intermediate-term moving averages have contained all of SLAB's weekly closings in the intervening months. The shares are currently perched just south of support from their 20-week moving average, but a 1.8% gain in today's trading suggests that the equity can easily climb back atop this trendline by week's end.

WEEKLY CHART OF SLAB SINCE APRIL 2007 WITH 10-WEEK AND 20-WEEK MOVING AVERAGES

Plus, the stock has plenty to gain from an unwinding of investor pessimism. In addition to SLAB's inflated SOIR, more than 10% of the stock's available float has been sold short. At the stock's average daily volume, it would take more than a week's worth of trading days for all of these bearish bets to be repurchased. If the stock bounces higher off its intermediate-term support levels, it could gain an additional boost from short-covering support as the bears try to limit their losses.

Analysts are already aligned in SLAB's corner. Zacks reports that the stock has garnered 6 "strong buys" and 3 "buys" from brokerage firms, along with just 4 skeptical "hold" ratings. Any downgrades from this bullish group could attract some selling pressure; however, the company isn't likely to attract such negative attention unless SLAB's technical performance falters.

Meanwhile, there's also room for more analysts to offer up their opinions. As recently as October 29, Kaufman Bros. initiated coverage of the stock at "buy," pushing the stock to a fractional gain for that trading day. Any positive comments or new initiations from brokers could spark some buying pressure and help give the shares a lift.

In today's trading, option players are favoring back-month contracts. The stock's January 2008 40 call has seen 937 contracts cross the tape on open interest of 2,707, while the January 2008 40 put has seen 1,714 contracts change hands on open interest of 9,083.

For more commentary on today's market-moving news from me and my colleagues Andrea, Jocelynn, Mark, Joseph and Beth, please visit our Schaeffer's Daily Market Blog section throughout the trading day.

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Option Activity Alert: Skepticism Builds Toward Chevron Corporation

(11/20/2009 2:05:53 PM)

Puts are quickly becoming the options of choice on Chevron Corporation (CVX: sentiment, chart, options). On Thursday, speculators on the International Securities Exchange (ISE) bought to open 3,102 puts on the oil major, compared to just 400 calls. The stock's single-day put/call volume ratio arrived at 7.76, as traders snapped up nearly eight times more puts than calls.

read more...

Option Activity Alert: Pessimistic Players Pummel Warner Chilcott Plc

(11/20/2009 11:32:34 AM)

Warner Chilcott Plc (WCRX: sentiment, chart, options) has become a favorite target of put players. During the past 10 days, speculators on the International Securities Exchange (ISE) have bought to open 2.90 puts for every call on WCRX. In other words, bearish bets have nearly tripled their bullish counterparts during the past two weeks. This reading ranks in the 100th annual percentile, revealing that traders are purchasing puts over calls at a more rapid pace than any other time during the past year.

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Option Activity Alert: Skepticism Creeps In on Peabody Energy Corporation

(11/18/2009 11:43:05 AM)

Put options have rarely been more popular on Peabody Energy Corporation (BTU: sentiment, chart, options). On Tuesday, traders on the International Securities Exchange (ISE) bought to open 1,970 puts on BTU, compared to just 162 calls. The stock's single-day put/call volume ratio of 12.16 reveals that speculative investors scooped up more than a dozen bearish bets for every bullish contract.

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Option Activity Alert: Call Volume Rises on United States Natural Gas Fund, LP

(11/17/2009 2:45:59 PM)

Call options are steadily gaining popularity on United States Natural Gas Fund, LP (UNG: sentiment, chart, options). On Monday, traders on the International Securities Exchange (ISE) bought to open 4,252 calls on the exchange-traded fund (ETF), compared to 1,557 puts. In short, nearly three times more calls than puts were purchased.

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Option Activity Alert: Bulls Bombard Apple Inc.

(11/17/2009 11:50:07 AM)

Apple Inc. (AAPL: sentiment, chart, options) is becoming a favorite target of call players. On Monday, traders on the International Securities Exchange (ISE) bought to open 17,088 calls on the iPhone parent, compared to just 4,079 puts. In other words, speculators snapped up 4.19 times more bullish bets than bearish.

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Option Activity Alert: Rising Bullish Speculation on Rosetta Resources Inc.

(11/16/2009 1:00:45 PM)

Buy-to-open call volume has been steadily building on Rosetta Resources Inc. (ROSE: sentiment, chart, options). During the past 10 days, speculators on the International Securities Exchange (ISE) have bought to open 163.46 calls for every put on the equity, revealing a hefty skew toward bullish bets over their bearish counterparts. This ratio ranks higher than all other such readings taken during the past year, indicating that traders have attained an annual optimistic peak.

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Option Activity Alert: Traders Have Their Doubts About VMware, Inc.

(11/16/2009 12:30:29 PM)

Bearish sentiment appears to be rising toward VMware, Inc. (VMW: sentiment, chart, options). On Friday, traders on the International Securities Exchange (ISE) bought to open 1,551 puts on VMW, compared to just 165 calls. The stock's single-day put/call volume ratio of 9.40 reveals that bearish option buys easily outpaced their bullish counterparts.

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Option Activity Alert: Put Volume Picks Up on Freeport-McMoRan Copper & Gold Inc.

(11/13/2009 2:00:09 PM)

Put volume has been accelerating lately on Freeport-McMoRan Copper & Gold Inc. (FCX: sentiment, chart, options). During the past 10 days, traders on the International Securities Exchange (ISE) have bought to open 0.94 put for every call on FCX. While calls purchased have narrowly outnumbered puts during the past two weeks, this ratio actually ranks higher than 81.1% of other such readings taken during the previous year. In other words, option traders have snapped up puts over calls at a faster pace only about 19% of the time.

read more...

Option Activity Alert: Goldman Sachs Group, Inc. Garners Bullish Attention

(11/13/2009 12:08:18 PM)

Calls have been the options of choice lately on Goldman Sachs Group, Inc. (GS: sentiment, chart, options). On Thursday, Nov. 12, traders on the International Securities Exchange (ISE) bought to open 4,113 calls on GS, compared to 3,829 puts. The equity's single-day call/put volume ratio of 1.07 indicates that bullishly oriented options were in slightly greater demand than their bearish counterparts.

read more...

Option Activity Alert: Call Buying Spikes on Assured Guaranty Ltd.

(11/12/2009 1:15:19 PM)

Call volume has been unusually heavy lately on Assured Guaranty Ltd. (AGO: sentiment, chart, options). In fact, on Wednesday alone, call activity surged to 37 times the usual levels, with 27,000 contracts crossing the tape. Yesterday's activity was no anomaly, though -- the International Securities Exchange (ISE) reports that traders have bought to open 19,953 calls on AGO during the past five days, compared to just four puts.

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Option Activity Alert: Silicon Laboratories

Option traders bet against Silicon Laboratories (SLAB) with a tidal wave of put buying

by Elizabeth Harrow (eharrow@sir-inc.com) 11/13/2007 12:48 PM

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