Western Digital Stock Hit by Soft Guidance, Bear Notes

Options traders have been more put-heavy than usual on WDC

Managing Editor
Jul 27, 2018 at 9:35 AM
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Shares of Western Digital Corp (NASDAQ:WDC) are lower in early trading after the company reported soft first-quarter guidance, which is overshadowing its fiscal fourth-quarter beat. In response, the tech name has received no fewer than seven price-target cuts, with the most notable coming from BMO to $74 from $90. WDC is down 4.1% at $73.96, at last check.

Looking broader, Western Digital stock has been plunging lower on the charts, already shedding more than 30% from its mid-March multi-year highs near $107. Since then, WDC has felt resistance from the 50-day moving average, and is now down 17% year-over-year.

Contrary to this morning's slew of bear notes, analyst attention has been mostly optimistic on the digital memory specialist. Out of 21 analysts in coverage on WDC, 13 sport "strong buy" recommendations. Plus, the stock's average 12-month price target stands all the way up at $108.37. 

Digging into options data, Western Digital stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 0.63, but ranks in the 79th annual percentile. Though the lower ratio suggests a preference for calls, the stock's lofty percentile indicates that puts have been purchased over calls at a faster-than-usual clip during the past two weeks of trading.

Echoing this, short-term traders are also more put-skewed than usual, with the Schaeffer's put/call open interest ratio (SOIR) of 1.16 ranking in the 78th percentile of its annual range. This indicates that near-term put open interest outweighs call open interest by a wider-than-usual margin right now.


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