Climbing Ambarella Shares Could Cool Off

AMBA's near-term options are inexpensive right now

by Emma Duncan

Published on Mar 14, 2019 at 1:49 PM

GoPro (GPRO) supplier Ambarella Inc (NASDAQ:AMBA) has been climbing higher on the charts, now up 46% from its Nov. 20 four-year low of $30. However, one technical signal indicates AMBA's upside momentum could cool off in the near future.

At last glance, Ambarella stock was trading flat, just above $43.80. Digging deeper, AMBA is now trading within one standard deviation of its 80-week moving average, after a lengthy stretch below this trendline. The stock has made similar run-ups seven times in the past 15 years, shedding 6.1%, on average, one month out, per Schaeffer's Senior Quantitative Analyst Rocky White. Another plunge of this magnitude would put AMBA stock just above $41.

Weekly Chart of AMBA with 80MA

Switching to options data, AMBA traders are more call-heavy than usual right now. This is per the security's Schaeffer's put/call open interest ratio (SOIR) of 0.22, in the 12th annual percentile, suggesting near-term call open interest exceeds put open interest by a much wider-than-usual margin. Should AMBA once again retreat in the face of its 80-week trendline, an exodus of option bulls could weigh on the shares.

In closing, it may be a good time for traders to speculate on Ambarella stock's near-term trajectory with options. The tech name's Schaeffer's Volatility Index (SVI) of 38% ranks in the 2nd annual percentile, meaning short-term options are extremely cheap at the moment, from a historical volatility perspective.

START YOUR DAY SMARTER.

Get Schaeffer's pre-market news bulletin every morning before the bell rings.
It's free to sign up.


Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Answer to This Roller Coaster Market
Artificial intelligence may revolutionize trading.
Drug Stock Scales Nasdaq, Squeezes Shorts on Upbeat Trial Data
Cantor Fitzgerald is already bullish on ALDX's big breakthrough
Another Bull Note for Suddenly Red-Hot Nvidia Stock
NVDA has gained 45% since its late-December bottom
The Answer to This Roller Coaster Market
Artificial intelligence may revolutionize trading.