Apple Supplier Cirrus Logic, Inc. (CRUS) Attracts Option Bears

While fellow Apple Inc. (NASDAQ:AAPL) supplier Broadcom Ltd (NASDAQ:AVGO) rallies, Cirrus Logic, Inc. (NASDAQ:CRUS) is attracting option bears

by Andrea Kramer

Published on Mar 22, 2016 at 1:50 PM
Updated on Jun 24, 2020 at 10:16 AM

The shares of Broadcom Ltd (NASDAQ:AVGO) are just off an all-time high of $155.61, up 1.1% on upbeat comments about Apple Inc.'s (NASDAQ:AAPL) new iPhone. In fact, analysts at RBC said Apple supplier AVGO could be a key beneficiary of the iPhone SE, which it projects could sell 10 million to 15 million units this calendar year. On the other hand, fellow Apple supplier Cirrus Logic, Inc. (NASDAQ:CRUS) -- unnamed by RBC -- is down 1.2% at $35.13, and option traders are betting on more short-term downside.

CRUS has seen more than 7,500 puts cross the tape so far today -- 14 times the average intraday put volume. For comparison, fewer than 650 CRUS calls have traded. Most active is the weekly 3/24 34.50-strike put, where it appears some speculators are purchasing new positions. By doing do, they expect CRUS to breach $34.50 by Thursday's close, when the contracts expire.

The shares of CRUS have surged roughly 40% since skimming the $25 region in mid-January, with help from a stellar earnings report, touching a year-to-date high earlier this month. However, today's appetite for near-term CRUS puts is nothing new. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.96 indicates that short-term puts nearly double calls. Plus, this ratio sits in the 99th percentile of its annual range, suggesting near-term traders have rarely been more put-heavy during the past year.

The April 35 put is home to peak open interest in the front-month series, with more than 3,100 contracts in residence. In the near term, this abundance of puts could translate into options-related support for CRUS. The equity could also find an ally in the form of its 30-day moving average, which has ascended into the $34.50 area.
 
Plus, should CRUS resume its journey higher, a short squeeze could add fuel to the equity's fire. Short interest represents nearly a week's worth of pent-up buying demand, at Cirrus Logic, Inc.'s (NASDAQ:CRUS) average pace of trading.


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