Texas Instruments Stock Gains Despite Quick CEO Departure

Options traders have been call-heavy towards TXN over the past 10 weeks

Managing Editor
Jul 18, 2018 at 9:38 AM
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Texas Instruments Incorporated (NASDAQ:TXN) is on the rise in early trading, even after Brian Crutcher resigned from his position as CEO for violating the company's code of conduct. Rich Templeton has reassumed the job as president and CEO -- a role in which he had just left in early June. The leadership change comes less than a week before the company's impending July 24 earnings report.

From a broader perspective, TXN has been an outperformer on the charts, gaining more than 40% in the past 12 months. More recently, the stock's brief pullbacks have been contained by the rising 50-day moving average, leaving Texas Instruments stock near its January record peak of $120.75, last seen trading up 0.8% at $116.72.

Despite last night's resignation news, RBC hiked its price target on TXN to $127 from $125 coming into today. Interestingly, analyst sentiment is almost evenly split among those covering Texas Instruments stock, with 13 of the 25 firms sporting "buy" or better recommendations.

Digging into options data, traders have been leaning bullish towards the semiconductor concern, with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing TXN with a 50-day call/put volume ratio of 1.23, ranking in the 84th annual percentile. This shows that calls have been purchased over puts at a faster-than-usual clip during the past 10 weeks.

Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.56 ranks in the 5th annual percentile. This low ratio shows that short-term traders are more call-skewed than usual toward the stock. Lastly, Texas Instruments' Schaeffer's Volatility Index (SVI) of 26% is in just the 37th percentile of its annual range. This indicates that near-term options are still pricing in relatively modest volatility expectations, even with earnings less than a week away.


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