Skyworks Solutions Inc (SWKS) Option Bulls Make a Rare Appearance

Skyworks Solutions Inc (NASDAQ:SWKS) is trading higher today on upbeat iPhone 7 reports

by Karee Venema

Published on May 23, 2016 at 3:03 PM
Updated on May 23, 2016 at 4:16 PM

Semiconductor stocks are rallying today, following upbeat reports about Apple Inc.'s (NASDAQ:AAPL) iPhone 7 production. Among those enjoying sector tailwinds is integrated circuit specialist Skyworks Solutions Inc (NASDAQ:SWKS), which is up 2.3% at $66.04. SWKS' positive price action has sparked a rush of call activity in the stock's options pits, with volume running at 1.4 times the average intraday rate.

Most active by a mile is SWKS' weekly 6/3 69-strike call, where it seems safe to assume new positions are being purchased. If this is the case, the goal is for the stock to topple $69 by next Friday's close, when the weekly options expire. Although the equity hasn't traded north of here since taking an earnings-induced tumble in late April, the most the call buyers have risked is the initial premium paid.

More broadly speaking, today's accelerated call activity runs counter to the withstanding trend seen in SWKS' options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 2.31 sits just 2 percentage points from a 52-week peak. In other words, put options have been bought to open over call options at a near-annual-high clip.

What's more, the stock sports a Schaeffer's put/call open interest ratio (SOIR) of 1.64 -- higher than all other comparable readings taken in the past 52 weeks. Simply stated, short-term speculators are more put-heavy toward SWKS than they've been over the last 12 months.

Now appears to be the time for options buyers to strike on the equity's short-term strikes, too. Not only does its Schaeffer's Volatility Index (SVI) of 33% rank in the 11th annual percentile, but its 30-day at-the-money implied volatility of 33.9% rests lower than 94% of similar readings taken over the past year. Summing it all up, premium on SWKS' near-term options is pricing in relatively low volatility expectations at the moment.

On the charts, Skyworks Solutions Inc (NASDAQ:SWKS) has been a long-term laggard, shedding 36% year-over-year. However, today's pop has shares of SWKS on track to close north of their 20-day moving average for the first time since mid-April.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.

A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

Huge New Legal Marijuana Market Has Shortage Crisis
250 million Europeans have access to medical marijuana. There's already a shortage....
J M Smucker Stock Jammed by Ugly Sales Outlook
J M Smucker's fourth-quarter profits and revenue were better than Wall Street expected
NIO Rises on Record-Breaking Deliveries
Nio stock hit a record high in vehicle deliveries for May
The Next Big Player in U.S. MJ Boom
Most pure-play marijuana stocks in the U.S. trade on the Over-the-Counter stock exchange.