2 Apple Suppliers Catching Fire on the Charts and in the Options Pits

Apple suppliers Cirrus Logic, Inc. (CRUS) and Skyworks Solutions Inc (SWKS) are burning up the charts amid iPhone 7 hype

Sep 15, 2016 at 12:25 PM
facebook twitter linkedin

Shares of Apple Inc. (NASDAQ:AAPL) suppliers are red-hot once again, amid ongoing iPhone 7 hype. Among the outperforming stocks are Cirrus Logic, Inc. (NASDAQ:CRUS) and Skyworks Solutions Inc (NASDAQ:SWKS), which are both seeing accelerated options trading activity.

CRUS was last seen 6.8% higher at $54.81 on heavy volume, and earlier hit a more than 20-year high of $55.17. This has the stock's call options flying off the shelves at eight times the usual intraday clip, and in the 95th percentile of its annual range. Digging deeper, options traders are targeting the near-the-money $55 level. Specifically, potential buy-to-open activity is detected at the weekly 9/23 and October 55-strike calls, suggesting upside expectations over the short term.

However, the general trend in CRUS' options pits has been toward puts over calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 1.33 puts for every call in the past 10 days. What's more, the stock's Schaeffer's put/call open interest ratio (SOIR) comes in at 1.54, with puts outstripping calls among options expiring in the next three months.

Why the interest in Cirrus Logic, Inc. puts? Well, given the stock's long-term technical strength, it may be that shareholders are purchasing the options to hedge against potential speed bumps down the road, rather than speculating on a pullback.

Turning to SWKS, the shares have bolted to a 6% gain at $76.77, making them the top performer on the S&P 500 Index (SPX) -- with this outperforming stock a close second. Longer term, however, Skyworks has hardly set the world on fire. On a year-over-year basis, the stock is down 16%.

As alluded to, SWKS options are trading at a brisk pace, quadrupling the typical rate seen at this point in the day. Most active is the September 75, with most of the volume buyer-driven, and volume outstripping open interest -- hinting at newly initiated positions

Speaking more generally, call buying has been the prevailing trend in SWKS' options pits. At the ISE, CBOE, and PHLX, traders have bought to open twice as many calls as puts during the past two weeks, and the resultant call/put volume ratio of 2.02 registers near the top quartile of its annual range.

However, some of these call purchases may have come at the hands of short sellers hedging against a breakout. Short interest soared 20% during the most recent reporting period, and accounts for one week of trading activity, based on Skyworks Solutions Inc's typical daily volume.

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.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 


300x250 - Banner 3 - v1