Options Traders Are Flocking To These Apple Suppliers

Both AMD and CY stocks are seeing a spike in option activity

Managing Editor
Aug 17, 2017 at 3:21 PM
facebook twitter linkedin


There's been notable options volume lately on Apple suppliers Advanced Micro Devices, Inc. (NASDAQ:AMD) and Cypress Semiconductor Corporation (NASDAQ:CY). Here's a quick look at how options traders have been placing their bets on AMD and CY stocks. 

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.

MAO Aug 17

Put Buying Picking Up Steam on AMD Stock

Advanced Micro Devices stock made headlines earlier this week as the chip stock was pulling back from its earnings-induced July 26 high of $15.65. However, AMD has remained around the $12 level, and is down 1.5% today to trade at $12.44. Still, the security remains roughly 10% higher year-to-date. 

In the options pits, traders have been favoring calls on an absolute basis. More than 537,824 calls have been traded in the past 10 days, compared to 336,697 puts. That's a shift from the longer-term trend toward put-buying; data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows AMD with a 50-day put/call volume ratio of 0.45, which ranks in the 91st percentile of its annual range. 

The good news for AMD traders is that options are attractively priced. Its Schaeffer's Volatility Index (SVI) of 48% is higher than just 7% of all other readings from the past year, implying that near-term options are pricing in relatively low volatility expectations. Furthermore, the shares' Schaeffer's Volatility Scorecard (SVS) sits at 87, indicating AMD stock has tended to exceed option traders' volatility expectations during the past year.

Options Bulls Flocking To Cypress Semiconductor

Cypress Semiconductor stock is currently down 3.4% to trade at $13.26. The Apple supplier has had a solid year, up over 15% year-to-date, and although it recently pulled back from its July 27 high of $15.11, it could find familiar support from its 160-day moving average

In the options pits, 28,946 CY calls have been traded in the past 10 days, compared to just 3,243 puts. According to ISE/CBOE/PHLX data, the 10-day put/call volume ratio of 58.24 ranks in the 89th percentile of its annual range. The September 15 call is home to peak open interest, and data from the major options exchanges points to a mix of buy- and sell-to-open activity here in recent months. Those buying to open the call are betting on the semiconductor stock rallying back above $15 in the coming weeks, while call writers expect the shares to continue trading below this level. 

There still remain plenty of short sellers hanging around CY, though. Short interest has increased by nearly 4% during the last reporting period, and accounts for a healthy 10% of the stock's total available float. This represents almost a week's worth of pent-up buying demand, at the average pace of trading. Should Cypress Semiconductor turn higher, it could compel these bears to abandon ship, which would give the Apple supplier even more juice.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners