Options Bulls Blitz Surging Texas Instruments After Earnings

The weekly 7/26 options series is popular today

Jul 24, 2019 at 2:19 PM
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Texas Instruments Incorporated (NASDAQ:TXN) is red-hot today, sparking accelerated activity in the chip stock's options pits. The stock is up 7.7% at $129.28 -- fresh off a record high of $129.80 -- after the semiconductor firm's second-quarter earnings beat eased concerns over slowing global microchip demand, and most of today's options volume has occurred on the call side, as speculators target more upside by week's end.

With just about two hours left in today's session, roughly 34,000 calls have changed hands -- six times what's typically seen, and volume pacing in the 100th annual percentile. Puts are crossing at a quick clip, too, with the 23,000 puts on the tape about five times the expected intraday amount.

Looking at specific strikes, the weekly 7/26 125-strike call is most active, though it looks like speculators may be liquidating the now in-the-money options. Elsewhere, traders may be purchasing new positions at the weekly 7/26 128-strike and 130-strike calls. By doing so, call buyers expect TXN to close north of the strikes by expiration at the close this Friday, July 26.

Texas Instruments earnings have also drawn a number of bullish analyst notes, with no fewer than 13 brokerages boosting their price targets on the chipmaker. Jefferies set the highest bar at $170 (up from $137), projecting an inventory restock in the second half of this year. Overall, 15 of 21 analysts still call TXN a "hold," while the average 12-month price target sits below current levels at $127.30. A continued round of bull notes could create even bigger tailwinds for the surging tech stock.

txn stock daily price chart on july 24


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