NXP Semiconductors NV (NXPI) Put Options Pop as Apple Family Drops

NXP Semiconductors NV (NXPI) options are hot as Apple Inc. (AAPL) suppliers drop

by Andrea Kramer

Published on Jan 6, 2016 at 11:41 AM
Updated on Jan 6, 2016 at 11:41 AM

Put options are flying off the shelves for NXP Semiconductors NV (NASDAQ:NXPI), which is swimming in the red amid heightened expectations for Apple Inc. (NASDAQ:AAPL) to cut iPhone production. NXPI is down 1.3% at $81.34, and puts are crossing the tape at four times their average intraday rate. What's more, today's put/call volume ratio of 3.05 sits in the 97th percentile of its annual range, underscoring a healthier-than-usual appetite for bearish bets on NXPI.

Digging deeper, most of the action has centered on the weekly 1/8 80-strike put, where close to 3,100 contracts traded in a massive sweep out of the gate. Assuming it was one trader, he or she paid a volume-weighted average price (VWAP) of $1.93 for the puts, meaning profits will increase the steeper NXPI slides beneath $78.07 (strike minus VWAP) by Friday's close, when the options expire. NXPI touched a low of $78.91 today.

The Apple buzz started yesterday, weighing on several other iPhone suppliers. Should the blue chip continue to drag its partners lower, a flood of negative analyst attention could exacerbate selling pressure on NXP Semiconductors NV (NASDAQ:NXPI). Since exploring triple-digit territory in mid-2015, the stock has embarked on a series of lower highs and lows, and has underperformed the S&P 500 Index (SPX) in the past three months. Nevertheless, 13 out of 15 analysts maintain "strong buy" opinions, and the average 12-month price target of $106.29 is in territory not charted since June.

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