Sigma Designs, Inc. (SIGM) Spike Prompts Bullish Betting

Sigma Designs Inc (SIGM) is above $7 for the first time in over two years


Published on Dec 31, 2014 at 3:08 PM
Updated on Apr 20, 2015 at 5:09 PM

For the first time in over two years, Sigma Designs Inc (NASDAQ:SIGM) has eclipsed the $7 mark, gaining 11.4% today to perch at $7.14, thanks to a price-target hike to $8 from $7 from Needham (which also reiterated its "buy" opinion). This jump -- which topped out at a new three-year high of $7.34 -- has sparked heavy activity in the stock's options pits.

Overall options volume is running at 20 times the normal intraday rate for SIGM, and calls have been the bets of choice -- outstripping puts by a 100-to-1 margin. Considerable attention has been focused on the February 7.50 call, where 1,263 contracts are on the tape, most of which appear to have been bought to open. These traders expect SIGM to continue its run higher, finishing above $7.50 by the close on Friday, Feb. 20, when the back-month series expires.

Taking a step back, the stock has really picked up steam in the past two months after grinding lower for a few years. In fact, SIGM has outperformed the broader S&P 500 Index (SPX) by 53.5 percentage points in the past 40 sessions.

On the sentiment front, the two analysts covering Sigma Designs Inc (NASDAQ:SIGM) rate it a "buy." Similarly, the equity's consensus 12-month price target sits at $8.00 -- territory not explored since November 2011.

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