Options Check-Up: Advanced Micro Devices, Marvell, and Sirius XM

Analyzing recent option activity on AMD, MRVL, and SIRI

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Published on Nov 20, 2014 at 8:14 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are semiconductor stocks Advanced Micro Devices, Inc. (NYSE:AMD) and Marvell Technology Group Ltd. (NASDAQ:MRVL), as well as streaming content provider Sirius XM Holdings Inc. (NASDAQ:SIRI). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on AMD, MRVL, and SIRI.

  • AMD lost 0.8% yesterday to close at $2.63, bringing its year-to-date deficit to 32%. Nevertheless, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open more than 34 calls for every put during the past two weeks. The resultant call/put volume ratio of 34.26 ranks in the 94th percentile of its annual range, suggesting a healthier-than-usual appetite for bullish bets over bearish -- a dramatic shift from how speculators were wagering a month ago. However, some of these positions may have been at hands of short sellers hedging against unexpected upside, as 22.2% of Advanced Micro Devices, Inc.'s float is sold short. At the stock's typical daily trading levels, this would take more than a week to buy back. Regardless of the motive, short-term AMD options are relatively affordable right now, as the security's Schaeffer's Volatility Index (SVI) of 44% sits below 81% of comparable readings from the previous year.

  • MRVL, which is scheduled to step into the earnings confessional tonight, lost 0.8% yesterday to land at $13.37. Longer term, the shares are down 7% in 2014, and have underperformed the broader S&P 500 Index (SPX) during the last couple of months. Accordingly, Marvell Technology Group Ltd. has racked up a 10-day ISE/CBOE/PHLX put/call volume ratio of 0.38, which ranks in the 71st percentile of its 12-month range. In other words, speculators have been buying to open puts over calls at an accelerate rate in recent weeks. Meanwhile, MRVL's SVI of 34% stands above just 36% of similar readings from the past year, suggesting short-term contracts are relatively inexpensive at present, even with earnings around the bend.

  • Finally, SIRI dropped 1.1% on Wednesday to close at $3.52, and is only slightly above breakeven on a year-to-date basis. However, in recent weeks, the shares have rallied -- specifically, since touching an October low of $3.14, the stock is up 12.1%. That said, traders at the ISE, CBOE, and PHLX remain unconvinced. Sirius XM Holdings Inc.'s 10-day put/call volume ratio of 0.47 sits above 85% of like readings from the previous 12 months -- though it's possible a portion of these bets were initiated by shareholders bracing against potential downside. In any case, short-term SIRI options can be had at a relative bargain right now, as the equity's SVI of 20% is lower than 91% of other such readings from the past year.

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