The Apple Supplier That Could Be Screaming Buy

Texas Instruments stock could break out soon, if past is prologue

Sep 11, 2017 at 1:41 PM
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Apple will host its highly anticipated iPhone event tomorrow, with rumors and leaks about the "iPhone X" already running rampant. Against this backdrop, several Apple suppliers are in focus today, and one stock could be screaming "buy," if history is any indicator: Texas Instruments Incorporated (NASDAQ:TXN). Below, we'll take a look at how TXN stock has performed on the charts, and why Texas Instruments' short-term options could be a relative bargain.

TXN shares have spent the past few months dawdling between support in the $80 region and resistance in the $83-$84 area. However, the stock recently came within one standard deviation of its 80-day moving average, after a lengthy time above this trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, after the last nine similar occurrences, Texas Instruments stock enjoyed a one-month rally 78% of the time, averaging a healthy gain of 3.86%. At last check, TXN shares were up 1.4% at $82.50; another 3.86% rally would put the stock around $85.68 -- in territory not explored since 2000.

texas instruments stock chart


Options traders looking to speculate on Texas Instruments stock's short-term trajectory can do so at a relative discount, too. The equity's Schaeffer's Volatility Index (SVI) is in the bottom third of its annual range, pointing to historically attractive near-term premiums right now.

While TXN options volume tends to run light, on an absolute basis, recent buyers have been upping the bullish ante. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 1.40 is higher than 79% of all other readings from the past year, pointing to a healthier-than-usual appetite for long TXN calls over puts.
 

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