Bears Circle Cirrus Logic on Apple Headwinds

CRUS puts are trading at an accelerated pace

by Josh Selway

Published on Apr 1, 2019 at 1:46 PM
Updated on Jun 24, 2020 at 10:16 AM

Fabless semiconductor concern Cirrus Logic, Inc. (NASDAQ:CRUS) is trading sharply lower today, after Craig-Hallum said the company's adaptive noise cancellation (ANC) is not in the new Apple AirPods 2, according to iFixit teardown. What's more, the brokerage firm suggested more Apple-related headwinds could be in store, since its channel checks point to a bigger-than-expected slowdown in iPhone sales. In response, CRUS put options are popular once again.

At last check, 850 puts had traded, which is light on an absolute basis, but ranks in the 88th annual percentile. It is also double the amount of calls traded so far. The most popular contract is the weekly 4/12 37-strike put, which was home to heavy open interest coming into today, so some traders may be selling positions. New positions, meanwhile, are being opened at the weekly 4/5 38-strike put. Anyone buying these puts would be betting on CRUS stock falling below $38 by Friday's close.

Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows that some put traders got a jump on Cirrus even before today. By the numbers, the equity's 10-day put/call volume ratio of 2.37 ranks in the 70th annual percentile, showing unusual demand for long puts over calls in recent weeks. More broadly, however, total open interest on the security is just 16,168 contacts -- 1 percentage point from an annual low.

At last check, the shares were trading down 4.3% at $40.33. While this price action puts a dent in the stock's year-to-date uptrend, the 200-day moving average looks like it's acting as support once again. On the other hand, CRUS has failed to overcome the $43-$45 region that blocked breakout attempts in August and November.

crus stock chart


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