Pre-Earnings Cirrus Logic, Inc. (CRUS) Bulls Eye Annual-High Territory

Cirrus Logic, Inc. (CRUS) will report earnings after tonight's close

by Karee Venema

Published on Jan 28, 2015 at 11:59 AM
Updated on Apr 20, 2015 at 5:32 PM

A strong quarterly earnings report for Apple Inc. (NASDAQ:AAPL) is giving a halo lift to integrated circuit specialist Cirrus Logic, Inc. (NASDAQ:CRUS) and its sector peers today. At last check, the shares were up 3.7% at $26.77, after earlier tagging a nearly two-year high of $27.69. In CRUS' options pits, calls are trading at almost four times the average intraday pace, and according to the stock's 30-day at-the-money implied volatility -- which is up 6.1% at 53.2% -- short-term contracts are in high demand.

Drilling down, the equity's weekly 2/13 31-strike call has seen the most action, and it appears a number of these positions have been bought to open. By initiating the long calls, traders are betting CRUS to topple the $31 mark by the time the options expire at the close on Friday, Feb. 13 -- territory not charted since January 2013, and a time frame which encompasses tonight's fiscal third-quarter earnings report.

From a wider sentiment perspective, today's affinity for short-term calls just echoes the withstanding trend. Not only does the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.48 indicate call open interest more than doubles put open interest among options expiring in three months or less, but it ranks lower than 99% of similar readings taken in the past year. Simply stated, near-term traders have rarely been as call-heavy toward CRUS as they are now.

Technically speaking, CRUS has made some big moves since hitting an annual low of $16.80 in early December -- and is up 59%, thanks in part to some upbeat analyst attention. Should Cirrus Logic, Inc. (NASDAQ:CRUS) turn in a well-received earnings report this evening, another round of bullish brokerage notes could help propel the shares even higher. Currently, half of the analysts covering the stock maintain a tepid "hold" rating, while its average 12-month price target of $27.50 is just a chip-shot away from CRUS' present perch.


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