Semiconductor Stock Inching Higher After Bull Note

Calls are popular in the options pits

Deputy Editor
Jul 22, 2020 at 10:25 AM
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Applied Materials Inc (NASDAQ:AMAT) is up 0.9% at $64.36 at last check -- heading toward its highest close since February -- after a price-target hike from Mizuho to $70 from $62, with a reiterated "buy" rating on the shares. The firm stated that AMAT's June quarter should see improving water fab equipment (WFE) order trends. 

AMAT has successfully rebounded on the charts from its mid-March lows, currently trading at levels not seen since late February. Year-to-date, the stock is up 4.7%, with support emerging at its 20-day moving average.

Analysts are leaning bullish overall on AMAT. Thirteen out of the 18 in coverage sport a "buy" or better rating, with the remaining five at a "hold," and no "sells" or worse in sight. Meanwhile, the consensus 12-month target price of $70.08 is a 9.4% premium to current levels. 

This sentiment is echoed in the options pits, as 3.03 calls have been bought for every put in the last 10 weeks at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 97% of all readings from the past year, revealing a strong penchant for long calls of late. 

That said, speculating on AMAT's next move with options could be a prudent play. The stock's Schaeffer's Volatility Index (SVI) of 44% stands higher than just 19% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 


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