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Put Buying Jumps as Advanced Micro Devices, Inc. (AMD) Drops

Advanced Micro Devices, Inc. (AMD) was downgraded by UBS earlier

by 3/25/2015 2:57 PM
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Advanced Micro Devices, Inc. (NASDAQ:AMD) is among a number of semiconductor stocks getting demolished today. At last check, the shares have plunged 5.6% to trade at $2.63 -- bringing them into the red on a year-to-date basis. Meanwhile, activity in AMD's options pits is feverish.

Most of the attention centers around puts, with the contracts running at quadruple the average intraday pace. In the lead is the July 2.50 put, where some long positions are seemingly being initiated as speculators bank on the equity breaching $2.50 by July options expiration.

Historically speaking, AMD hasn't closed below the strike since late January. However, with the shares sharply lower, delta on the aforementioned put has moved to negative 0.37 from negative 0.30 at Tuesday's close, signaling increased chances of an in-the-money finish.

Advanced Micro Devices, Inc. (NASDAQ:AMD) faces skepticism outside of the options pits, too. Thirteen of 18 covering analysts rate the shares a "hold" or worse. Today, in fact, UBS downgraded AMD to "sell" from "neutral."


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Micron Technology, Inc. (MU) Swoon Catches the Eye of Option Bears

Micron Technology, Inc. (MU) puts are trading at two times the average intraday pace

by 3/25/2015 2:15 PM
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Micron Technology, Inc. (NASDAQ:MU) is following its sector peers into the red today -- last seen off 4.7% at $26.66, after MKM Partners started the equity with a lackluster "neutral" rating. Against this backdrop, puts are once again trading at a rapid-fire rate -- double the average intraday pace, to be specific -- with a number of speculators apparently rolling the dice on additional losses over the next several weeks.

MU's April 27 put has seen the most action, where nearly 7,600 contracts have changed hands so far. There appears to be some buy-to-open activity here, as traders bet on the security extending its trek south of the strike through the close on Friday, April 17 -- when the contracts expire -- a time frame which includes the company's earnings report, due the evening of Thursday, April 2. Amid today's drop, delta on the put has moved to negative 0.52 from negative 0.35 at last night's close, signaling an increased probability of an in-the-money finish.

Today's accelerated put activity is nothing new for the stock. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MU's 10-day put/call volume ratio of 0.51 ranks higher than 83% of similar readings taken in the past year. In other words, puts have been bought to open over calls at a faster-than-usual clip in recent weeks.

This glass-half-empty approach shouldn't be too surprising, either, considering shares of MU have shed almost 24% year-to-date, and are currently on track to notch their lowest daily close since May 20. Should Micron Technology, Inc. (NASDAQ:MU) continue to struggle, a round of downgrades and/or price-target cuts could pressure the shares lower. At present, roughly 86% of covering analysts maintain a "buy" or better rating, while the average 12-month price target of $41.88 rests in territory not charted since August 2001.


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Marvell Technology Group Ltd. (MRVL) Bulls Active Despite Sector Swoon

Marvell Technology Group Ltd. (MRVL) traders are buying April calls

by 3/25/2015 2:02 PM
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Semiconductor firm Marvell Technology Group Ltd. (NASDAQ:MRVL) is following its sector peers lower, down roughly 3.5% this afternoon to reach $14.93. Prior to today, the shares of MRVL were already sliding, and are now down 11% from their Feb. 20 two-year high of $16.78. Despite this negative price action, call activity in the options pits has been ramping up, with some speculators apparently viewing the dip as an opportune time to go long.

Calls have exchanged hands at three times the average rate today, and are outpacing puts by an over 4-to-1 ratio. Possible buy-to-open activity has been detected at the April 14.50 and April 16 calls, which are today's two most active contracts by far. By purchasing these calls, traders expect the security to edge north (or continue moving north) of the respective strikes by the close on Friday, April 17, when front-month options expire.

This spate of call activity echoes recent sentiment in the options pits, as MRVL's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 78.46 ranks higher than 98% of all equivalent readings taken over the past year. Additionally, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.21 sits in the 17th percentile of its annual range, showing that short-term speculators have rarely been more call-heavy over the past 12 months.

Looking elsewhere, the brokerage bunch is skeptically skewed toward Marvell Technology Group Ltd. (NASDAQ:MRVL), as 48% of covering analysts rate the stock a "buy" or better, with the remaining 52% doling out "hold" or worse recommendations. What's more, MRVL's consensus 12-month price target of $16.83 is a chip-shot away from current trading levels.

Daily Chart of MRVL Since September 2014

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Skyworks Solutions, Inc. (SWKS) Bears Emerge as Semiconductors Tank

Skyworks Solutions Inc (SWKS) option bears are active as semiconductors take it on the chin

by 3/25/2015 1:20 PM
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Skyworks Solutions Inc (NASDAQ:SWKS) is just one of many semiconductor stocks taking it on the chin today. The shares have dropped 6.7% to trade at $94.64 -- surrendering a newfound foothold in triple-digit territory -- and option bears have come out swinging. Intraday put volume is running at three times the average pace, with speculators taking a shine to newly front-month contracts.

Digging deeper, the April 93 and 95 puts are most active, and data suggests the options are being bought to open. By purchasing the puts, the buyers expect SWKS to extend today's retreat beneath the respective strikes by the close on Friday, April 17, when the options expire. SWKS hit an intraday low of $94.02 earlier.

In the wake of SWKS' drop, delta on the 93-strike put has soared to negative 0.39 from negative 0.16 at yesterday's close, reflecting growing odds for an in-the-money finish on expiration day. Likewise, delta on the 95-strike put now sits at negative 0.49, compared to negative 0.21 last night. In other words, the contracts have about a 1-in-2 shot of expiring in the money.

Up until today, Skyworks Solutions Inc (NASDAQ:SWKS) was in rally mode. The stock touched a record high of $102.77 on Monday, bringing its 14-day Relative Strength Index (RSI) to a lofty 81 -- in overbought territory, suggesting today's breather may have been in the cards. At last check, the shares were testing their mettle atop their 20-day moving average, which -- along with its 10-day cohort -- has contained most of SWKS' pullbacks since October.

Daily Chart of SWKS since October 2014 with 10-Day and 20-Day Moving Averages

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Yahoo! Inc. (YHOO) Option Bulls Bet on a Breakout

Yahoo! Inc. (YHOO) has been unable to gain ground since its late-January bear gap

by 3/25/2015 12:31 PM
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Calls are changing hands at a quicker-than-usual rate in Yahoo! Inc.'s (NASDAQ:YHOO) options pits today, after the security was featured on CNBC's Fast Money segment yesterday. The stock's weekly 3/27 45-strike call has seen over 9,300 contracts cross, more than four times as many as the next closest option. It seems safe to assume the contracts are being bought to open -- a theory echoed by data from the International Securities Exchange (ISE) -- as traders bet on the shares to topple $45 before the close this Friday, when the options expire.

Today's behavior marks a change in speculators' usual routine, as puts have been popular of late, according to data from the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Across these exchanges, YHOO's 10-day put/call volume ratio of 0.47 is only 3 percentage points from a 12-month high. In other words, puts have been bought to open over calls at a near-annual-high rate in recent weeks.

Checking out the charts, Yahoo! Inc. (NASDAQ:YHOO) gapped lower in late January following a poorly received earnings report, and since then, the stock has been unable to make up ground, trading between $42 and $45. On the year, the shares have dropped 12%. YHOO was last seen flat on the day at $44.42.

Daily chart of YHOO since January 2015

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