Options Trading Accelerates as Micron, NVIDIA Test Key Trendlines

Semiconductor stocks Micron Technology, Inc. (MU) and NVIDIA Corporation (NVDA) recently touched key moving averages

Mar 6, 2017 at 10:33 AM
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The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Stocks highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Two names of notable interest are semiconductor stocks Micron Technology, Inc. (NASDAQ:MU) and NVIDIA Corporation (NASDAQ:NVDA). Here's a quick look at how options traders have been approaching MU and NVDA shares.

popular options micron technology nvidia stocks

Bullish Signal Stokes Micron Call Buying 

MU options have been very popular of late, and over the past two weeks, none has been more popular than the April 25 call.  During that time frame, 21,673 contracts have been added to open interest -- the most of any strike -- with data from the major exchanges confirming substantial buy-to-open activity. In short, options traders expect MU stock will extend its lead above the $25 mark through back-month expiration, at the close on Friday, April 21.

Call buying is par for the course, speaking more generally. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MU has amassed a 10-day call/put volume ratio of 4.73 -- in the top quartile of its annual range. Wall Street is pretty bullish across the board, in fact. Fifteen of 18 analysts rate the shares a "buy" or better, with not a single "sell" opinion on the books. Today, Loop Capital and J.P. Morgan Securities raised their price targets to $30 and $33, respectively -- both in two-year-high territory.

Speaking of highs, Micron Technology, Inc. just hit an annual milestone on March 3, at $25.68. The stock isn't far from there -- last seen down 1% at $25.32. More gains could be in store, as the shares just bounced off their 40-day moving average. Over the past three years, MU has been positive 75% of the time 21 days after that signal, with an average gain of 5%.

NVIDIA Options Traders Eye $100 Level

NVDA options have been flying off the shelves lately, too. Seeing the largest increase in open interest over the past two weeks is the April 100 strike, with the call adding 11,058 contracts, and the put adding 12,544. According to ISE, CBOE, and PHLX data, options traders have mostly bought to open the call -- anticipating a return to triple-digit territory -- while the put has witnessed a mixed of buying and selling. Put writing has been a trend, in fact. Across the three major exchanges, 42,151 puts have been sold to open in the past two weeks, outstripping the 34,405 bought to open.

Put sellers counting on a bottom could be in trouble, however. NVIDIA Corporation shares have turned over on the charts, since topping out north of $120 in early February. Since then, the stock has surrendered 20.5% of its value -- including 2.3% today, to trade at $96.17. In the process, NVDA shares have violated historical support at their 80-day moving average, and could soon test the 100-day trendline.

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