Stocks quoted in this article:
Shares of Texas Instruments (TXN - 46-5/16) have been trading sideways within the 35 to 53 range since early October.
Options investors have been hesitant to make a commitment in one direction or the other on the shares. Schaeffer's Daily Sentiment shows that the Schaeffer's put/call open interest ratio (SOIR) has also been trending sideways since hitting a near term low (bullish investor sentiment) in September.
The near-the-money January 45 put currently has 25,126 in open interest, but is exceeded in open interest by the out-of-the-money January 22-1/2 put with 37,771 open contracts.
Yesterday, 1,000 contract blocks traded in each of the February 50 call and the February 50 put. In what typifies recent options trading on TXN, this investor has not committed to a direction for the shares, but is expecting a dramatic move in either direction by February expiration. The worst case scenario for this trader would be a continued consolidation in the shares (neither a sharp upward or down ward move).
In a move that may tilt the scales today, a Morgan Stanley analyst cut the shares from an "outperform" rating to a "neutral" rating. Anticipating softness in global demand for Digital signal processing and analog technology, the analyst reduced his 2001 earnings for TXN from $1.60 per share to $1.53 per share.