Options Bears Circling Flailing Texas Instruments Stock

The November 135 put is popular today

Deputy Editor
Oct 28, 2020 at 2:35 PM
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Texas Instruments Incorporated (NASDAQ:TXN) is ice-cold today -- as are most of the stocks on Wall Street -- sparking accelerated put activity in the chip stock's options pits. Texas Instruments stock is down 3.1% at $142.60, just over two weeks removed from its Oct. 12 all-time high close of $154.90. Additionally, TXN looks set to close below its 40-day moving average for the first time since Sept 25. Still, year-to-date the security is up 11%.

TXN Chart October 28

While there's still a decent amount of time left in today's session, roughly 16,000 puts have already changed hands -- six times what's typically seen, and volume pacing in the 99th annual percentile. Calls, meanwhile, are barely making any noise, with just over 2,000 on the tape, well below the expected intraday amount. Looking at specific strikes, the November 135 put is most active, followed by the March 2021 155-strike put, with new positions being opened at the latter.

This penchant for bearish bets has been the norm for TXN for quite some time. In fact,  data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the equity's 50-day put/call volume ratio coming in at 1.19. That stands in the 97th percentile of its annual range, suggesting a bigger appetite for long puts over the last 10 weeks.

A short squeeze could keep the wind at Texas Instruments stock's back. Short interest is down 9.7% in the past two reporting periods, and now accounts for roughly 13.26 million shares, and would take just over three days to buy back these bearish bets at the equity's average pace of daily trading.

Those wanting to get in on the security's rise may want to consider options. Options traders are pricing in relatively low volatility expectations at the moment, per the stock's Schaeffer's Volatility Index (SVI) of 35%, which sits higher than just 21% of all other annual readings.


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