2 Apple Inc. (AAPL) Suppliers Getting Rocked

Apple Inc. (AAPL) suppliers Cirrus Logic, Inc. (CRUS) and Skyworks Solutions Inc (SWKS) are attracting bearish options attention amid iPhone speculation

Jan 5, 2016 at 2:08 PM
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Tech titan Apple Inc. (NASDAQ:AAPL) is feeling the heat, amid more iPhone sales speculation. Japan's Nikkei said the blue chip will reduce iPhone output by about 30% in the current quarter, sending AAPL shares 2.1% lower to $103.19. What's more, option bears are bombarding Apple suppliers Cirrus Logic, Inc. (NASDAQ:CRUS) and Skyworks Solutions Inc (NASDAQ:SWKS), which are also notably lower.

CRUS is down 5.3% at $27.74, on pace for its lowest close since late September. Intraday put volume is running at four times the average pace, and is outpacing call volume by a margin of roughly 5-to-1. In fact, CRUS' put/call volume ratio of 5.07 is higher than 99% of all other readings from the past year. Meanwhile, CRUS' 30-day at-the-money implied volatility (IV) has popped 10.8% to 68.6%, just shy of an annual high.

It looks like short-term bears are buying to open CRUS' weekly 1/8 28-strike put -- the most active option so far -- at a volume-weighted average price (VWAP) of $0.94. By doing so, the buyers' profit will increase the lower CRUS sinks south of $27.06 (strike minus VWAP) by Friday's close, when the options expire. Slightly longer-term bears are scooping up the January 2016 27.50-strike puts, amid expectations that CRUS will extend its journey south of the strike through expiration at next Friday's close.

Pessimism is nothing new for Cirrus Logic, Inc. (NASDAQ:CRUS) option buyers. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.12 stands higher than 84% of all other readings from the past year. Likewise, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.01 is in the 75th percentile of its annual range, suggesting near-term traders are more put-heavy than usual.

SWKS is on a similar path, down 5.3% at $73.81 -- its lowest close in nearly a year -- shrugging off a freshly reinstated "overweight" rating and $95 price target at Barclays. Intraday put volume is running at twice the typical pace, with what appears to be buy-to-open action at the weekly 1/8 76-strike put. By buying the puts at a VWAP of $1.54, the speculators' profit will increase the lower SWKS sinks south of $74.46 through Friday's close.

Unlike CRUS, today's appetite for bearish bets marks a change of pace for Skyworks Solutions Inc (NASDAQ:SWKS). On the ISE, CBOE, and PHLX, the security's 10-day call/put volume ratio of 1.89 stands higher than 69% of all others taken during the past year.

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