Mobileye NV (MBLY) Surge Fails to Win Option Skeptics

Mobileye NV (MBLY) is rallying on a pair of bullish brokerage notes

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Published on Apr 15, 2015 at 10:46 AM
Updated on Apr 20, 2015 at 5:32 PM

Mobileye NV (NYSE:MBLY) is basking in the glow of positive analyst attention, up 7.3% at $45.43. Specifically, Deutsche Bank raised its price target to $55 from $53, while Morgan Stanley lifted its price target to $68, on higher expectations for adoption of the company's driver-assistance technology in Japan. However, not everyone's buying the hype, as put volume has spiked to eight times the usual intraday amount.

Diving right in, one of the most active MBLY options is the January 2016 40-strike put, which may be seeing some buy-to-open activity -- a theory echoed by data from the International Securities Exchange (ISE). By purchasing these out-of-the-money positions, speculators anticipate the stock will breach $40 by January 2016 options expiration. However, it's also possible these puts were purchased by shareholders to serve as a downside hedge.

Put buying has been popular in recent weeks at the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). MBLY's 10-day put/call volume ratio across these exchanges is 2.40, with long puts more than doubling calls.

While put buyers may be hedging, one group that's clearly bearish toward MBLY is short sellers. During the last two reporting periods, short interest on the equity soared 34.3%, and now makes up 15% of its float -- an amount that would take over a week to cover, at typical daily trading volumes.

From a technical perspective, this pessimism is tough to fathom. Mobileye NV (NYSE:MBLY) has added a respectable 12% year-to-date, and since touching a 2015 low of $32.41 in early March, the shares have advanced an even more impressive 40%.


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