There's heavy open interest at NXPI's 100 strike
Chip stocks are having a strong day, and one name joining in on the rally is NXP Semiconductors NV (NASDAQ:NXPI). NXPI stock is trading up 4.7% at $93.94, as the shares move back toward the $100 level after breaching it about a month ago. They're also trading near two levels of key technical support in the 160- and 200-day moving averages. Based on data from Schaeffer's Senior Quantitative Analyst Rocky White, the moving averages have historically sparked upside moves in NXPI, and it turns out this would be bad news for recent options traders.
According to White's data, there have been six similar pullbacks to the 160-day in the past three years, and four prior signals for the 200-day. For the former, the shares have averaged a one-month gain of 6.22%, and a 6.51% gain for the latter during the same time period. This means the 200-day signal suggests the stock could rally right back to the $100 region.
The problem is that options traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been buying puts at an extreme rate. NXP Semiconductor's 10-day put/call volume ratio at these exchanges is 3.03, which not only shows three long puts crossing for every long call during this time, but it also ranks in the 100th annual percentile.
Interestingly, peak open interest sits at the July 100 call, where more than 16,000 contracts reside. Today's trading has seen more of a focus on puts, with new positions opening at the weekly 8/2 60- and 65- puts.
Looking more broadly at sentiment, a slim majority of analysts recommend buying, and the average 12-month price target is up at $115.17 -- territory not charted in a year. More short term, NXPI is up 28% in 2019.