Wolfspeed Stock Surges on Massive Supply Deal

The security is moving above long-term resistance

Digital Content Manager
Jul 5, 2023 at 10:19 AM
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Wolfspeed Inc (NYSE:WOLF) announced earlier it signed a 10-year deal worth roughly $2 billion to supply semiconductor concern Renesas Electronics with silicon carbide bare and epitaxial wafers.

Last seen up 14% at $64.68, the security is breaking through long-term resistance at the $65 region. Today's pop has also placed the shares above their 120-day moving average for the first time since late November. Year-to-date, however, WOLF still carries a 4.2% deficit. 

There's ample room for upgrades, with nine of the 17 analysts in coverage rating the equity a "hold" or worse. Plus, the 18.03 million shares sold short account for 14.6% of the stock's available float, and would take more than one week to cover at its average pace of daily trading.

Options traders lean bullish. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WOLF's 10-day call/put volume ratio of 6.95 sits higher than 92% of annual readings, indicating calls have been getting picked up at a quicker-than-usual clip.

Diving into today's options activity, 3,445 calls and 1,200 puts have already exchanged hands, which is 20 times the intraday average volume. Most popular is the July 70 call, where positions are being opened.

It's also worth noting Wolfspeed stock's Schaeffer's Volatility Scorecard (SVS) sits at 92 out of 100, suggesting it has exceeded option traders' volatility expectations during the past year. 

 

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