Huawei Warning Sparks Accelerated Cohu Put Trading

Puts are crossing at nine times the average intraday rate

Jul 9, 2019 at 2:53 PM
facebook twitter linkedin


Cohu, Inc. (NASDAQ:COHU) stock hit a two-year low of $13.86 earlier, and was last seen down 5% at $14.31. The California-based semiconductor testing firm said last night that recent U.S. restrictions on Chinese tech firm Huawei is hurting its customers' business, and the company will implement a temporary salary reduction program.

The stock is now on track for its fifth straight loss, which will mark its longest losing streak since March. Year-over-year, the shares have surrendered more than 45%, with recent rally attempts contained by their descending 180-day moving average. However, today's decline is stalling out near $14.10 -- a familiar floor for the security since its late-December lows.

Against this backdrop, options volume is running at a quick clip on Cohu stock today. Although still light on an absolute basis, puts are crossing the tape at nine times the average intraday rate. Buy-to-open activity has been detected at the July 10 put, which would suggest speculators expect a drop into single digits by the close next Friday, July 19 -- territory not charted since October 2015.

Short sellers would certainly welcome additional downside. Short interest spiked 12.4% in the most recent reporting period to 1.76 million shares. This represents a healthy 6.3% of COHU's available float, or five times the average daily pace of trading. Continued short selling could increase pressure on the shares.

There's room for analysts to lower their outlooks the underperforming tech stock, too, which could spark more selling. All three covering brokerages maintain a "strong buy" rating on COHU, while the average 12-month price target of $21.17 is a 48% premium to current trading levels.

cohu daily chart july 9

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners