Apple Supplier Bounces Off Annual Lows

Applied Materials options are quite pricey right now

Managing Editor
Mar 19, 2020 at 2:15 PM
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It's been quite a day for Apple (AAPL) supplier Applied Materials, Inc. (NASDAQ:AMAT). The stock opened lower out of the gate, only quickly pare those losses and pivot higher. At last check, AMAT was up 2.7% to trade at $39.96, but still faces a steep uphill climb out of its 2020 losses.

More specifically, Applied Materials stock is down 34% year-to-date, and last week breached its 320-day moving average for the first time since June. Since a Feb. 13 record high of $69.44, the shares have shed 42%, culminating in an annual low of $36.64 yesterday. 

AMAT Stock Chart

Analysts remain firmly entrenched in the bullish camp. There are 17 brokerages covering AMAT, and 14 rate it a "buy" or better, with only one "sell" on the books. Plus, the security's consensus 12-month price target of $73.05 is a 82.5% premium to its current perch. 

Options traders have a strong penchant for calls. AMAT's put/call open interest ratio (SOIR) sits at 0.98, and ranks in the 1st percentile of its annual range. In other words, short-term options players have rarely been more call-heavy in the last 12 months.

However, it should be warned that those looking to speculate on AMAT with options will need to pay up for premiums at the moment. The 30-day at-the-money (ATM) implied volatility (IV) right now is 111% and ranks in the 99th annual percentile, hinting at higher-than-normal volatility expectations around the stock at the moment.


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