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Call Volume Jumps on ON Semiconductor, Despite Price-Target Cut

ONNN sees an abundance of bullish options activity

by 12/9/2011 12:36 PM
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ON Semiconductor (ONNN - 8.07) received a price-target cut to $9 from $10 at Baird early this morning, but that hasn't stopped bullish bettors from zeroing in on the stock today. Roughly 14,000 calls have crossed the tape so far, reflecting 14 times the equity's expected intraday call volume. The at-the-money December 8 strike has seen the bulk of the action, where nearly 10,500 calls have been traded -- the majority of them at the ask price, suggesting they were bought. This option is currently home to peak front-month call open interest of just 4,585 contracts, making it safe to assume that new positions are being opened here today.

What's more, the Schaeffer's put/call open interest ratio (SOIR) for ONNN sits at 0.45, confirming that calls more than double puts among options set to expire within three months. Even so, this ratio ranks in the 69th annual percentile, which means that short-term options players have still been more bullishly oriented toward the stock 69% of the time during the past 12 months.

Meanwhile, ONNN's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio rests at 3.72, which indicates that calls bought to open have almost quadrupled puts during the past two weeks. However, this ratio ranks in only the 26th percentile of its annual range, conveying that traders are purchasing bullish options over bearish at a slower-than-usual clip.

On the technical front, ONNN has lost more than 18% of its value year-to-date, but has outperformed the broader S&P 500 Index (SPX) by over 7% during the past 20 sessions. On the charts, the stock is poised to close above its 10-week and 20-week moving averages for the second consecutive week, the latter of which has served as troublesome resistance since mid-July.

At last check, ONNN is up about 1.4% to hover at the $8.07 level.


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