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)

Jan 28, 2015 at 8:25 AM
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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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