Semiconductor Stock Sees Call Surge in the Options Pits

Call traders are picking up STM at the fastest rate all year

Deputy Editor
Jul 14, 2020 at 2:05 PM
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The shares of Switzerland-based semiconductor name STMicroelectronics NV (NYSE:STM) are up 1.6% at $28.77 at last check. Although the specific catalyst is unclear, STM options traders are going wild in response. 

On the charts, STM has been steadily moving upward from its mid-March lows, with support from its 30-day moving average smoothing out recent pullbacks. Year-over-year the stock is up 60.9%, and is a chip-shot from its Feb. 13 18-year high of $31.98.

Looking closer at the options activity, over 135,000 calls have crossed the tape so far -- 62 times the average intraday amount. For reference, today's volume is running at triple the previous call volume annual high of yesterday. Most popular by far is the August 35 call, where new positions are being opened. Buyers of these calls are banking on more multi-year highs from STM in the next month, when the options expire. 

This appetite for calls is nothing new. In the last days, 16,369 calls were exchanged on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to a paltry 56 puts. Plus, the resultant call/put volume ratio sits in the 100th  percentile of its annual range, suggesting a much healthier-than-usual appetite for bullish bets of late. 

STM July 14

Out of the eight analysts analysts in coverage, five sport a "strong buy" rating on STM, while three linger at a tepid "hold." However, the consensus 12-month target price of $26.33 is a 8.5% discount to current levels, indicating the security is ripe for bull notes.




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