Semiconductor Stock Looks Ready to Bounce

Short interest has been rising on ADI stock

by Josh Selway

Published on Sep 26, 2018 at 11:09 AM
Updated on Jun 24, 2020 at 10:16 AM

While it hasn't been a steady rise, Analog Devices, Inc. (NASDAQ:ADI) sports an 11.4% year-over-year gain, including a 1% rise today to trade at $93.50. This is despite a multi-month pullback since the shares hit a June peak of $103.59. However, ADI stock's chart could be flashing a bullish signal, so options traders may want to pay attention.

The equity recently pulled back to its 320-day moving average, and data from Schaeffer's Senior Quantitative Analyst Rocky White shows that this could mean near-term upside is on the horizon. For example, ADI has come within one standard deviation of this trendline four times in the past three years following a lengthy stretch above it, and it's gone on to average a one-month gain of 4% afterwards.

adi stock chart

Looking at other data on Analog Devices, there's been notable activity from short sellers, with the number of shares sold short steadily increasing in recent weeks. In the last two reporting periods alone, short interest rose by more than 16%, putting the equity's short-interest ratio at a healthy 3.0.

Near-term options traders also appear defensive, based on the Schaeffer's put/call open interest ratio (SOIR) of 1.21, showing put open interest outweighs call open interest among contracts expiring within three months. But no matter how you're approaching ADI shares, volatility expectations are relatively tame at the moment. This is according to the stock's Schaeffer's Volatility Index (SVI) of 23%, ranking in the 27th annual percentile, meaning premiums are relatively muted on short-term options contracts.


A Schaeffer's 39th Anniversary Exclusive!

8 Top Stock Picks for 2020

Access your FREE insider report before it's too late!


  
 
 

Partnercenter