Tech Rally Attracts Skyworks Solutions, Inc. (SWKS) Bulls

Skyworks Solutions Inc (SWKS) call options are popular as tech stocks heat up

May 27, 2015 at 2:10 PM
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Tech stocks -- especially those under the telecom and semiconductor umbrellas -- are hot today, and Skyworks Solutions Inc (NASDAQ:SWKS) is no exception. After touching a record peak of $108.03, the stock was last seen 4% higher at $107.9. What's more, the options crowd is rolling the dice on even higher highs for SWKS in the short term. 

Nearly 10,000 SWKS calls have traded already -- more than double the number of puts, and marking a 41% run-up from the equity's average intraday call action. It looks like speculators are buying to open 109-strike calls in both the weekly 5/29 and June series of options. 

The volume-weighted average price (VWAP) of the weekly call is $0.33, meaning the buyers will begin to profit if SWKS conquers $109.33 (strike plus VWAP) by the close on Friday, when the contracts expire. Due to its added time value, the VWAP of the June 109 call -- which expires at the close on Friday, June 19 -- is $2.34, making breakeven $111.34. 

Today's appetite for bullish bets marks a change of pace for SWKS, which has seen near annual-high levels of put buying during the past 10 weeks on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). In fact, the stock's 50-day put/call volume ratio of 0.52 stands higher than 98% of all other readings from the past year. 

Whatever your bias, now is an opportune time to gamble with Skyworks Solutions Inc's (NASDAQ:SWKS) short-term options. The security's Schaeffer's Volatility Index (SVI) of 31% registers in the 18th percentile of its annual range, suggesting SWKS' near-term contracts are relatively deflated right now. Meanwhile, the security's Schaeffer's Volatility Scorecard (SVS) is perched at a lofty 94, indicating the stock has tended to make outsized moves over the past year, relative to what the options market has priced in.

 

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