Apple Supplier Climbs Ahead of Q1 Report

Options bulls are clamoring around the display stock too

Deputy Editor
May 7, 2020 at 12:25 PM
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Semiconductor concern and iPhone screen specialist Universal Display Corporation (NASDAQ:OLED) is gearing up for its first-quarter earnings report due out after the close this evening, with its stock up 4.6% to trade at $153.33 today. With support in place at its 20-day moving average, OLED has gradually started to distance itself from its mid-March trough. 

OLED Chart May 7

Plenty of options players have their eye on the Apple supplier before earnings, too, with 2,667 calls and 1,895 puts across the tape so far, both of which are five times the average intraday volume. Positions are being opened at the May 170, 175 and 180-strike calls. This suggests these traders are speculating on plenty more upside for the underlying stock before these contracts expire next Friday, May 15. 

Today's call preference isn't new for OLED, which sports a 10-day call/put volume ratio of 3.54 at the International Securities Exchange (ISE), Cboe Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 92% of readings from the past year, suggesting a much heavier appetite for these bullish bets of late. 

Analyst sentiment, meanwhile, is more lukewarm. Just two covering OLED consider it a "strong buy" compared to six "holds" and one "strong sell." That being said, the consensus 12-month price target of $192.11 is a 24.9% premium to current levels. 

A look at Universal Display's past eight earnings reports show the chip stock tends to do well the day after earnings, ending higher 63% of the time and averaging a next-day swing of 12.2% regardless of direction. This includes an impressive post-earnings pop of 23% back in February of last year. This time around the options market is pricing in a slightly bigger swing of 13.6%. 

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