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After showing off some new applications at the WDM Conference in Monaco, Xilinx, Inc. (NASDAQ:XLNX) option volume is at nearly six times the norm, powered by the 8,100-plus puts traded so far. The vast majority of those puts changed hands at the July 38 strike, with 96% of the 7,006 contracts coming in at the ask price.
Heading into Thursday, a mere 734 contracts made up open interest at the strike, suggesting that the puts were bought to open at a volume-weighted average price (VWAP) of $0.88. In order for these morning bears to profit from their transactions, therefore, XLNX -- currently priced at $38.83 -- will need to shed 4.4% by back-month expiration, to reach the $37.12 (strike price less VWAP) breakeven point. The traders would then profit step-for-step with any movement south of that mark, while the most they have at stake is the premium paid.
The pessimistic winds have been blowing toward Xilinx for a while now. According to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio is 3.60, which means that nearly four puts have been bought to open for every call over the past two weeks. That ratio ranks in the 74th percentile of its annual range, confirming the fact that put buying is occurring at a quicker-than-usual rate.
Consequently, the equity's Schaeffer's put/call open interest ratio (SOIR) is 1.47. This means that, in the front three-months' series of options, open interest on puts is nearly 50% higher than that on calls. Relative to the past year's worth of readings, the current SOIR places in the 78th percentile -- again pointing to the prevailing bearish bias toward XLNX.
On the charts, Xilinx, Inc. (NASDAQ:XLNX) has been an underperformer. Year-to-date, the tech name trails the broader S&P 500 Index (SPX) by roughly 4 percentage points; furthermore, it is currently facing resistance from its 20-day moving average, which acted as a level of support from late April to early June.