Options Traders Target 2 New S&P 500 Components

Both equities are seeing an uptick in bullish options activity

Deputy Editor
Jun 6, 2022 at 1:32 PM
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Keurig Dr Pepper Inc (NASDAQ:KDP) and ON Semiconductor Corp (NASDAQ:ON) are set to join S&P 500 Index (SPX) later this month, giving both stocks a bump today as they look for better exposure to everyday investors that tend to put more money into broad index funds. The equities are replacing Under Armour (UAA) and IPG Photonics (IPGP), which will both join the S&P 500 Mid Cap 400 (IDX).

On the charts, KDP was last seen 5.2% higher, trading at $36.77 and extending its rally from a roughly six-month low just above $33.50 touched in mid May. Today's pop also has the equity pacing for a close above the long-term 320-day moving average, which began pressuring the shares on May 17. Recently removed from its third-straight monthly dip, Keurig Dr Pepper stock sits just 0.4% below its year-to-date breakeven mark.

Options traders have favored KDP calls in recent sessions, with the stock's 10-day call/put volume ratio of 15.70 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) standing higher than 80% readings from the past 12 months. This implies that not only has the penchant for bullish bets been healthier than usual, nearly 16 calls have been picked up for every put in the last two weeks. 

Today's options pits are flashing a similarly bullish preference. At the session's halfway point, 4,367 calls have been bought, or four times the intraday average, while midday put volume of 1,323 is double what's typically seen at this point. The most popular contract by far is the June 38 call. 

ON Semiconductor stock, meanwhile, was last seen up 4% to trade at $65.47. The security enjoys a 71.9% year-over-year lead, and is moving back toward its Jan. 4, all-time high of $71.26. The security spent the better part of the last two months trading above and below the 180-day moving average, but seven-straight weekly wins have helped ON move well above the trendline once again.

Options traders are targeting On Semiconductor stock today. The 8,604 calls and 3,488 puts that have exchanged hands so far today amount of double the typical intraday volume. The 6/10 67-strike call is the most popular, followed distantly by the 80-strike call in the same weekly series, and new positions are being bought to open at each contract.

 

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