Bulls Take Aim as AMAT Reaches Record Highs Post-Earnings

Calls are running at eight times what's typically seen at this point

Deputy Editor
Feb 19, 2021 at 11:11 AM
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The shares of Applied Materials Inc (NASDAQ:AMAT) are up 8.9% to trade at $123.53 at last check, after the semiconductor name announced better-than-expected fiscal first-quarter earnings and revenue as well as a strong forecast. In response, no fewer than 14 analysts raised their price targets already, with the highest from J.P. Morgan Securities to $146 from $88. 

On the charts, today's pop has AMAT trading at new record highs, surpassing its recent Feb. 16 high of $121.13. The equity has enjoyed monthly gains in three of the last four months, and is so far on track for a February win as well. Since the start of 2021, AMAT is already up 41.8%. 

Analysts are, for the most part, bullish on Applied Materials stock, though there is still some room for upgrades. More specifically, 13 of the 18 analysts in coverage carry a "buy" or better rating on the security, with the remaining five a tepid "hold." Meanwhile, short sellers are jumping ship, with short interest down 19.3% during the most recent reporting period, to make up just 1.1% of AMAT's available float. 

Meanwhile, options traders are chiming in post-earnings, with calls running at eight times what's typically seen at this point. So far, 41,000 calls and 9,655 puts have crossed the tape, with the February 125 call the most popular by far. This means plenty of traders are betting on more upside for AMAT by the contract's expiration at the end of the day. 

These options are reasonably priced at the moment too, per the stock's Schaeffer's Volatility Index (SVI) of 48%, which stands higher than 18% of all other readings in its annual range. This implies that options players are pricing in relatively low volatility expectations at the moment. 


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