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

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

Jan 6, 2016 at 11:41 AM
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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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