Chip Stock Could Soon Soar to New Highs

Options traders have been more put-biased than usual

Deputy Editor
Jan 3, 2022 at 1:43 PM
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The shares of NXP Semiconductors NV (NASDAQ:NXPI) are starting 2022 on the right foot, on pace to add around 2% on the first trading session of the new year. Year-over-year, NXPI is up 46.3%, despite several pullbacks occurring over that timespan. More recently, the stock is flashing a historically bullish signal on the charts. 

Specifically, NXPI just pulled back to its 40-day moving average after more than a month above the trendline, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. White's study shows the security coming within one standard deviation of this key level 11 other times within the past three years, with positive one-month returns 80% of the time. NXP Semiconductors stock averaged a 5.7% pop one month after these signals. From its current perch at $232.08, a similar move would put the stock at $245.30 -- a fresh record high.  

NXPI Chart Jan 3

The equity looks like it could still benefit from a shift in the options pits, too. NXPI's 10-day put/call volume ratio of 1.76 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 97% of readings from the last year. This means puts have been getting picked up at a faster-than-usual clip of late.

Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.33 ranks higher than 83% of readings from the past year. This means, short-term options traders are more put-biased than usual

There's still room to get in on NXP Semiconductor stock's next move with options. The security's Schaeffer's Volatility Index (SVI) of 31% stands higher than only 21% of readings from the past 12 months. This means options players have been pricing in relatively low volatility expectations at the moment.

 

 

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