Stocks quoted in this article:
The shares of Analog Devices, Inc. (ADI - 39.20) are on the upswing today, thanks to solid earnings and guidance from sector peer Linear Technology (LLTC). What's more, ADI has also attracted its fair share of bullish option bettors, with nearly 3,900 calls already across the tape -- more than double its average daily call volume. For comparison, just about 1,600 ADI puts have changed hands.
Jumping right in... It seems speculators are establishing new positions at the February 20 and 22 calls, which have each seen intraday volume exceed open interest. Plus, the majority of the back-month calls have traded closer to the ask price, suggesting they were bought. By purchasing the calls to open, the buyers are expecting ADI to muscle north of the respective strikes within the options' lifetime.
From a broader sentiment standpoint, however, today's affinity for long calls runs counter to the growing trend. Specifically, on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 10-day put/call volume ratio of 2.47, indicating that traders have bought to open more than two ADI puts for every call during the past two weeks. What's more, this ratio sits just 13 percentage points shy of a 52-week peak, hinting at a healthier-than-usual appetite for bearish bets over bullish of late.
Nevertheless, there's still plenty of room on ADI's bearish bandwagon. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.40 indicates that calls more than double puts among options slated to expire within three months. Plus, this ratio registers in the 10th annual percentile, suggesting that short-term options traders are still more call-heavy than usual on ADI.
Around midday, ADI has advanced 5.9% to flirt with the $39.20 level.