Options Check-Up: Linear Tech, Microchip Tech, NXP

Analyzing recent option activity on Linear Technology Corporation (LLTC), Microchip Technology Inc. (MCHP), and NXP Semiconductors NV (NXPI)

by Griffin Kruse

Published on Jan 28, 2015 at 8:25 AM
Updated on Jul 31, 2020 at 5:35 PM

Among the stocks attracting attention from options traders lately are semiconductor specialists Linear Technology Corporation (NASDAQ:LLTC), Microchip Technology Inc. (NASDAQ:MCHP), and NXP Semiconductors NV (NASDAQ:NXPI). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on LLTC, MCHP, and NXPI.

  • LLTC is up about 2.8% over the past 52 weeks -- despite a 1.6% loss yesterday -- to rest at $46.03. However, the stock has retreated 11.1% since hitting a 13-year high of $51.77 in early April. Sentiment in the security's options pits is nearing a bearish peak, with Linear Technology Corporation's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.32 sitting just 1 percentage point from its annual high. What's more, 60% of covering analysts rate the equity a "hold" or worse. Speculators are paying relatively inexpensive prices for their bets on LLTC, per its Schaeffer's Volatility Index (SVI) of 21%, which is in the 22nd percentile of its annual range.

  • It's a similar technical story for sector peer MCHP, which is up roughly 1.6% year-over-year to close at $45.79 yesterday, but has shed 8.5% since notching an all-time high of $50.03 in early July. Sentiment in the options pits is bullish ahead of Microchip Technology Inc.'s quarterly earnings report, due out tomorrow night. The stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 16.52 is higher than 90% of all similar readings taken over the past year. However, 10.3% of the equity's available float is sold short, which would take just over 13 sessions to buy back, at typical daily trading rates. Near-term options for MCHP are fairly priced, as its SVI of 29% sits in the 56th percentile of all other annual readings.

  • NXPI has been a juggernaut on the charts for a while, advancing 67% year-over-year to perch at $78.03. The security also reached an all-time high of $82.76 on Jan. 13, and has outperformed the S&P 500 Index (SPX) by nearly 14 percentage points over the past three months. Not surprisingly, sentiment in the options pits is bullish, per NXP Semiconductors NV's 50-day ISE/CBOE/PHLX call/put volume ratio of 1.53, which ranks in the 66th percentile of its annual range. Additionally, 11 out of 13 covering analysts rate the stock a "strong buy." The stock's short-term options are pricing in fairly average volatility expectations, as its SVI of 41% is in the 41st percentile of all similar readings taken over the past year.

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