Lam Research Options Come to Life After Downgrade

LRCX puts and calls are active today as the stock slips

Jun 12, 2019 at 12:01 PM
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Lam Research Corporation (NASDAQ:LRCX) has an interesting setup in the options pits based on some of Schaeffer's indicators, with short-term traders heavily put-skewed despite unusual call buying in recent weeks. For instance, the Schaeffer's put/call open interest ratio (SOIR) of 1.61 ranks in the 86th annual percentile, while the 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 2.36, with a 94th annual percentile rank. Today, puts and calls are both crossing at an accelerated rate as LRCX shares sink on an analyst downgrade.

The semiconductor equipment stock is trading down 4.7% to $180.97, after Evercore ISI downgraded its opinion to "in line" from "outperform," and dropped its price target to $195 from $225. In the analyst note, the firm wrote about a bleak outlook for DRAM and NAND pricing, and said delays in the industry could also weigh. A slim majority of analysts in coverage still recommend buying LRCX, and the average 12-month price target stands up at $220.42.

In the options pits today, calls and puts have each seen roughly 7,000 contracts traded, putting volume for both on pace to top the daily average. Seeing the most action is the weekly 6/14 180-strike call, where new positions are opening. Traders are also opening positions at the June 197.50 call. On the put side, there's interesting trading at the July 150 strike, where some could be preparing for a sharp drop in the security.

Meanwhile, short interest has been moving lower on the equity, down 19% in the last two reporting period. Just 6.04 million shares are held by short sellers are the moment, the fewest since 2011. Lam Research stock is currently up 33% year-to-date.

lrcx stock chart


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