Analyst Love Draws Options Bulls to Delphi Automotive (DLPH)

Bullish analyst notes and a record high have Delphi Automotive PLC (DLPH) traders buying April calls

Apr 6, 2015 at 12:15 PM
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Delphi Automotive PLC (NYSE:DLPH) is 3.9% higher at $84.32 -- and earlier touched a record peak of $85.08 -- after no fewer than six brokerage firms hiked their price targets on the equity. The most ambitious lift came from Morgan Stanley, which raised its price target by $15 to $105 while keeping its "overweight" opinion. On the charts, DLPH has been a long-term technical beast, with the shares up 27.9% year-over-year. In light of all this, some options traders are gambling on DLPH to continue notching higher highs, as call are flying off the shelves at a lightning-fast pace.

Drilling down, calls are exchanging hands at 28 times the average daily rate, and are outpacing puts by a staggering 127-to-1 ratio. The day's most active contract by a wide margin is the April 82.50 call, where buy-to-open activity is taking place. By purchasing this call, speculators expect the security to continue its trek above the strike price by the close on Friday, April 17, when the option expires.

However, today's preference for calls runs opposite to recent activity in the options pits. Specifically, DLPH's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 2.33 ranks in the 69th percentile of its annual range.

Looking elsewhere, the brokerage bunch is mostly bullish on Delphi Automotive PLC (NYSE:DLPH). Two-thirds of covering analysts rate the stock a "buy" or better, with no "sell" or worse recommendations to be found. Additionally, DLPH's average 12-month price target of $89.08 is only 4 points north of today's new high, suggesting more upward revisions could be on the horizon.

Daily Chart of DLPH Since April 2014
 

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