Call Traders Keep Hammering MCHP as Stock Hits New High

Call volume is at five times the daily average

Jan 7, 2020 at 2:48 PM
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The shares of semiconductor concern Microchip Technology Inc. (NASDAQ:MCHP) are making a strong move higher today, last seen up 6% at $109.93 and earlier tapped an all-time high of $110.80, thanks to the company's bullish sales outlook from last evening. This extends the equity's impressive trend higher in recent months, and call traders continue to pile on the outperformer.

At last check, call volume was running at roughly five times the average daily. New positions are opening at the February 110 call, the most popular contract today, though much of the volume has been at the bid price, suggesting traders expect the strike to serve as a ceiling. Other traders are opening positions in the April series at the 115, 125, and 135 calls, possibly betting on more upside in the coming months.

Options traders had been all over calls even before today, with more than 5,900 bought to open during the past 10 days at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to fewer than 500 puts. What's more, the Schaeffer's put/call open interest ratio (SOIR) of 0.31 ranks in the bottom annual percentile, meaning short-term call open interest outweighs put open interest by a much wider-than-normal margin.

Short interest remains high on Microchip Technology, however, suggesting there's short-covering potential behind it. By the numbers, 14% of the float is dedicated to short interest.
 

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