Mobileye NV (MBLY) Surge Fails to Win Option Skeptics

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


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%.

A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

Research Exposes Shortcut to Stock Market Wins
A simple way to stop picking losers, and start cashing in like Wall Street's elite.
Google Postpones Android Reveal, "Now is Not the Time to Celebrate"
"Now is not the time to celebrate," Google said in a message on its website
ZNGA Zooms to 8-Year High on Billion-Dollar Deal
ZNGA is planning to buy Peak for $1.8 billion
Huge New Legal Marijuana Market Has Shortage Crisis
250 million Europeans have access to medical marijuana. There's already a shortage....