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Options traders have been targeting Applied Materials, Inc. (AMAT) and Micron Technology, Inc. (MU)
The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Two names of notable interest are semiconductor issues Applied Materials, Inc. (NASDAQ:AMAT) and Micron Technology, Inc. (NASDAQ:MU).
AMAT has been a dud on the charts this year, off 10.5% to trade at $22.30 -- including today's 0.9% dip. What's more, the shares are set to close their second straight week south of their formerly supportive 40-week moving average, which could potentially switch roles to act as resistance going forward.
In spite of these tepid technicals, short-term options traders have targeted AMAT calls over puts. Specifically, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.22 indicates call open interest outweighs put open interest by a nearly 5-to-1 margin, among options expiring in the next three months. Additionally, this SOIR ranks in the low 21st percentile of its annual range, suggesting a stronger-than-usual skew toward short-term calls over puts. An unwinding of bullish bets could pressure AMAT south.
Similarly, 10 of 13 analysts rate the equity a "buy" or better, versus three "holds" and not a single "sell." Plus, AMAT's consensus 12-month price target of $26.68 stands in territory not charted in nearly 13 years. This leaves the door wide open for potential downgrades and/or price-target reductions.
MU has been even worse on the charts. The stock's year-to-date deficit stands at 20.2%, with the shares hovering around $27.95. In fact, the security has been stair-stepping its way lower since touching a decade-plus high of $36.59 in early December.
Accordingly, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bet bearishly in recent months. MU's 50-day put/call volume ratio across that trio of exchanges is 0.58 -- higher than 99% of all comparable readings from the previous 52 weeks. Echoing this, the stock's SOIR of 0.64 ranks in the 72nd percentile of its annual range.
However, analysts have yet to jump on MU's bearish bandwagon. Of the 23 brokerage firms tracking the equity, 18 have handed out a "buy" or better recommendation, compared to four "holds" and one "strong sell." On top of that, the stock's average 12-month price target of $39.47 sits in waters not charted since March 2002. In other words, as with Applied Materials, Inc. (NASDAQ:AMAT), Micron Technology, Inc. (NASDAQ:MU) may be vulnerable to a round of negative brokerage notes.