Climbing Ambarella Shares Could Cool Off

AMBA's near-term options are inexpensive right now

Managing Editor
Mar 14, 2019 at 1:49 PM
facebook twitter linkedin


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.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

 


 


 
Special Offers from Schaeffer's Trading Partners