3 Apple Suppliers Falling On iPhone Reports

Shares of Apple suppliers Broadcom Ltd (AVGO), Cirrus Logic, Inc. (CRUS), and QUALCOMM, Inc. (QCOM) are trading lower on rumors of another iPhone production cut

Dec 30, 2016 at 2:14 PM
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Apple Inc. (NASDAQ:AAPL) suppliers are trading lower today, on reports the tech titan is planning to curb iPhone production in the first quarter for the second time in as many years. Among the tech stocks trading lower with AAPL are Broadcom Ltd (NASDAQ:AVGO), Cirrus Logic, Inc. (NASDAQ:CRUS), and QUALCOMM, Inc. (NASDAQ:QCOM). Here's a closer look at how AVGO, CRUS, and QCOM stocks are moving on the Apple rumors, and how options traders are reacting.

AVGO was last seen down 1.9% at $176.45. Nevertheless, the stock remains 21.6% higher year-to-date, and is within a chip-shot of its Dec. 21 record high of $183.99. What's more, AVGO is comfortably on pace to notch a 14th consecutive close atop its 10-month moving average.

Options traders have been lining up on the bullish side of the fence, too. Broadcom Ltd's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.03 ranks in the 75th annual percentile -- meaning calls have been bought to open over puts at a faster-than-usual clip. Today, however, puts are outpacing calls by a 2-to-1 margin, with possible buy-to-open activity detected at the weekly 2/3 167.50-strike put.

CRUS, meanwhile, is trading 2.2% lower at $56.72 -- in danger of closing south of its 20-day trendline for the first time since Dec. 6. The stock has put in a stellar performance in 2016, though, tacking on 92%. Additionally, CRUS topped out at a 21-year peak of $60 on Wednesday.

Regardless, speculative players have been purchasing puts over calls at a rapid-fire rate in recent months, per Cirrus Logic, Inc.'s 50-day ISE/CBOE/PHLX put/call volume ratio of 2.18 -- in the elevated 72nd percentile of its annual range. This afternoon, puts are crossing at two times what's typically seen at this point in the day, with traders potentially initiating new long positions at the weekly 2/3 54.50-strike put.

Shares of QCOM have tumbled 1.4% to hover near $65.14, extending this week's regulation-induced decline and paring the stock's 2016 gain to 30.3%. And although the stock has surged more than 54% off its mid-February five-year low of $42.24, the $70 mark has served as a pesky ceiling in recent months. In fact, QCOM has not closed north of here on a monthly basis since February 2015, even after hitting an annual high of $71.62 in late October.

Short-term speculators have rarely been as put-skewed toward QCOM as they are now, according to the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.15 -- higher than 94% of all comparable readings taken in the past year. However, some of this activity could be of the short kind, considering options traders at the ISE, CBOE, and PHLX have sold to open 3.92 puts for each one they've bought in the last 10 sessions. Puts are trading at a slightly accelerated clip today, with possible sell-to-open activity occurring at QUALCOMM, Inc.'s weekly 1/6 61.50-strike put.

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