Mobileye NV (MBLY) Call Volume Heats Up Ahead of Big CES Announcement

News that a fleet of self-driving BMW cars will be launched later this year has Mobileye NV (NYSE:MBLY) shares trading higher ahead of tomorrow's big CES announcement

by Karee Venema

Published on Jan 4, 2017 at 10:34 AM
Updated on Oct 16, 2019 at 2:56 PM

Tech stocks will be in focus this week, as the Consumer Electronics Show (CES) gets underway. One name that could draw notable interest is self-driving car expert -- and one time Tesla Motors Inc (NASDAQ:TSLA) partner -- Mobileye NV (NYSE:MBLY), which is expected to make a big announcement, with some speculating about a potential collaboration with Volkswagon. Nevertheless, ahead of the event -- and amid news that BMW Group, Intel Corporation (NASDAQ:INTC), and Mobileye will test a fleet of autonomous cars in the second half of 2017 -- MBLY shares are trading up 2.6% at $42.24, and call volume is running at an accelerated clip in the stock's options pits.

Although volume is still relatively light in early trading, nearly 2,900 MBLY calls have changed hands so far -- three times what's typically seen at this point in the session. This echoes yesterday's action, when roughly 25,000 MBLY calls changed hands, five times the average daily rate and double the number of puts traded.

Drilling down, it seems possible MBLY's January 2017 37-strike and February 42 calls were used in a bullish roll up and out on Tuesday. If this was the case, the speculator sold to close her in-the-money front-month calls and bought to open the at-the-money back-month calls, expecting bigger gains for MBLY stock over the next seven weeks. Overnight open interest translations at each strike support this theory.

More broadly speaking, traders at International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 1.16 calls for each put in the past 10 days. And now appears to be an opportune time for premium buyers to strike, too. MBLY's Schaeffer's Volatility Index (SVI) of 56% ranks in the 30th annual percentile, meaning low volatility expectations are currently priced into the security's near-term options.

Outside of the options pits, traders have been more skeptical of MBLY. Although short interest is down 3% in the most recent reporting period, it still accounts for a lofty 14.4% of the stock's available float. Considering it would take nearly eight sessions to cover these remaining bearish bets -- at the equity's average pace of trading -- a continued bout of short-covering could translate into a fresh burst of buying power.

On the charts, MBLY has been swinging higher since taking a late-December bounce off the $34 level -- a region that served as a springboard for the shares in mid-June -- up more than 25%. What's more, Mobileye NV (NYSE:MBLY) is now trading north of the round $40 mark, and today's pop has the security on track to close north of its 120-day moving average for the first time since Sept. 26.

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