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3 Reasons to Watch Universal Display Stock

Reports that the premium iPhone 8 could have a curved OLED screen has traders rushing to Universal Display stock

Mar 15, 2017 at 2:50 PM
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Universal Display Corporation (NASDAQ:OLED) stock is getting a boost today, thanks to fresh reports Apple's premium iPhone 8 will feature the curved organic light-emitting diode (OLED) screens the company specializes in, though sources said the iPhone screens will be provided by Samsung Electronics. OLED stock was last seen 3% higher at $85.35, but this price action is nothing new. The shares are up 78% since their October lows, and just last month hit an all-time high of $88.50 following a well-received earnings release. Despite the equity's impressive technical performance, hints of pessimism still linger on Wall Street. Below are three reasons contrarians should keep an eye on OLED. 

OLED stock

1) Short-Squeeze Potential

Most notably, short interest has been steadily increasing for months, and OLED is now among the top 10 stocks that could squeeze shorts, per our calculations. Since Sept. 1, short interest on Universal Display shares has increased over 62%, and now stands at its highest point in nearly two years. In fact, roughly 11% of the stock's float is now in the hands of short sellers. 

2) Room for Upgrades

On top of this, half of the analysts covering the stock still say it's just a "hold." As such, there's not only potential for a short-squeeze situation to give OLED shares a boost, but a round of upgrades from the analyst community could also help the stock. 

3) Options Traders Put-Heavy

Data also points to an unusual preference for put options among near-term options traders -- although, on an absolute basis, call buying has still dominated across the major exchanges. For example, OLED's Schaeffer's put/call open interest ratio (SOIR) of 1.01 is an annual high, meaning options traders targeting contracts that expire within three months are the most put-heavy they've been in the past 52 weeks. Of course, some put activity could be from shareholders using options to protect paper profits, given the shares' impressive run higher. 

In today's trading, Universal Display Corporation (NASDAQ:OLED) calls are trading at an accelerated clip, accounting for the five most popular options. Leading the way is the March 85 call, followed by the April 90 call. Data isn't clear, but if traders are buying to open positions at the strikes, they're betting on OLED stock to rise to even higher highs in the coming weeks. 

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