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Linear Technology Ambushed by Near-Term Call Players

LLTC sees an upswing in both front- and back-month call volume

by 2/16/2012 1:45 PM
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Linear Technology Corporation (LLTC - 34.07) has been bombarded with call activity today, as more than 8,500 of these options have changed hands so far, reflecting seven times the equity's expected intraday volume. Most popular has been the February 34 and March 34 strikes, which have each seen close to 3,900 calls cross the tape -- most of which were traded between the ask and bid prices, making it difficult to discern whether they were bought or sold. However, while today's volume has exceeded open interest at the back-month strike, the front-month option is currently home to open interest of 4,514 contracts, so it is unclear if new positions are being opened at this strike. With front-month options expiring at the end of the week, we could be witnessing some rollout activity.

This affinity for calls over puts is part of an ongoing trend for LLTC. The Schaeffer's put/call open interest ratio (SOIR) sits at 0.54, confirming that calls nearly double puts among options slated to expire within three months. This ratio ranks in only the 27th percentile of its annual range, which means that short-term options traders have been more bullishly oriented toward the stock just 27% of the time over the last 12 months.

Meanwhile, short interest on the tech concern spiked by 12.39% during the past two reporting periods, suggesting that short sellers may have contributed to some of LLTC's recent call volume. However, there is still plenty of room aboard the equity's bearish ship, as these shorted shares make up a modest 3.86% of the stock's float.

Examining LLTC's technical performance, the equity has added over 13% so far this year, and has outpaced the broader S&P 500 Index (SPX) by more than 5% during the past 40 sessions. On the charts, the stock continues to trade well above its 200-day moving average, which had served as resistance until an earnings-related price surge in mid-January.

In the afternoon hours of the session, LLTC is ahead about 2% to explore the $34.07 area.


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