Options Run Hot as Ambarella, Inc. (AMBA) Takes Out $100

Ambarella Inc (NASDAQ:AMBA) toppled the round-number $100 level earlier

by Alex Eppstein

Published on Jun 4, 2015 at 2:17 PM
Updated on Jun 24, 2020 at 10:16 AM

Amid the company's annual shareholder meeting, Ambarella Inc (NASDAQ:AMBA) topped the century mark for the first time ever earlier, hitting a record high of $100.84 in the process. At last check, the stock was still 3.8% higher at $99.26 -- almost four times where it was this time last year. Not surprisingly, options activity has blown up.

By the numbers, 28,000 AMBA options are on the tape, tripling what's expected at this point in the session. Most active is the weekly 6/5 90-strike call, where it appears some traders are buying to open contracts at a volume-weighted average price (VWAP) of $8.34. In other words, these buyers think the shares will close above breakeven at $98.34 (strike plus VWAP) at tomorrow's close, when the series expires.

On the other side of the ledger, slightly longer-term traders are buying to open AMBA's June 15 put. In so doing, they're rolling the dice on the stock to breach the round-number $90 level by the close on Friday, June 19, when front-month options expire.

Historically speaking, put buying has been on the upswing. AMBA's 50-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 0.66 -- compared to 0.53 two weeks ago. What's more, the current ratio ranks in the 78th annual percentile.

In a similar vein, Ambarella Inc's (NASDAQ:AMBA) Schaeffer's put/call open interest ratio (SOIR) of 1.18 stands higher than 80% of comparable readings from the past year. Given the equity's strong gains, though, these put traders -- especially those buying to open out-of-the-money strikes -- may be shareholders protecting paper profits.

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