Skyworks Solutions Bears Emerge as Semiconductors Tank

Skyworks Solutions Inc (SWKS) option bears are active as semiconductors take it on the chin

Mar 25, 2015 at 1:20 PM
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Skyworks Solutions Inc (NASDAQ:SWKS) is just one of many semiconductor stocks taking it on the chin today. The shares have dropped 6.7% to trade at $94.64 -- surrendering a newfound foothold in triple-digit territory -- and option bears have come out swinging. Intraday put volume is running at three times the average pace, with speculators taking a shine to newly front-month contracts.

Digging deeper, the April 93 and 95 puts are most active, and data suggests the options are being bought to open. By purchasing the puts, the buyers expect SWKS to extend today's retreat beneath the respective strikes by the close on Friday, April 17, when the options expire. SWKS hit an intraday low of $94.02 earlier.

In the wake of SWKS' drop, delta on the 93-strike put has soared to negative 0.39 from negative 0.16 at yesterday's close, reflecting growing odds for an in-the-money finish on expiration day. Likewise, delta on the 95-strike put now sits at negative 0.49, compared to negative 0.21 last night. In other words, the contracts have about a 1-in-2 shot of expiring in the money.

Up until today, Skyworks Solutions Inc (NASDAQ:SWKS) was in rally mode. The stock touched a record high of $102.77 on Monday, bringing its 14-day Relative Strength Index (RSI) to a lofty 81 -- in overbought territory, suggesting today's breather may have been in the cards. At last check, the shares were testing their mettle atop their 20-day moving average, which -- along with its 10-day cohort -- has contained most of SWKS' pullbacks since October.

Daily Chart of SWKS since October 2014 with 10-Day and 20-Day Moving Averages
 

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