Options Bulls See Upside for STM in the New Year

Options bulls are coming out in droves today

Deputy Editor
Dec 15, 2020 at 2:45 PM
facebook twitter linkedin


Swiss-based semiconductor name STMicroelectronics NV (NYSE:STM) is taking small steps in an effort to bridge last week's bear gap. The stock is up 3.8% at $36.62 at last check, clearing the 40-day moving average, which kept a lid on the shares following its Wednesday drop. A closer look at the charts shows the $35 mark containing some of these losses, while the 60-day moving average also stepped in to provide some support. 

STM Dec 12

The consensus among options traders is that these two previously mentioned levels will hold as support in the coming months, too. In fact, there's been a massive uptick in bullish options activity today, with 39,000 calls across the tape so far -- eight times the intraday average -- compared to just 1,102 puts. The July 35 call is seeing plenty of action, as well as the January 2021 40-strike call, with positions being opened at the former. 

These bullish tendencies toward the chip stock have been the norm, per STM's 10-day call/put volume ratio of 27.03 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 60% of readings from the past year. This suggests an overwhelming number of calls have been picked up for every put during the past two weeks, and at a slightly quicker-than-usual clip. 

For those looking to speculate on STM's next move, options look like a good way to go. The security's Schaeffer's Volatility Index (SVI) of 44% is higher than just 16% of readings from the past year. This means options players are pricing in relatively low volatility expectations for STM at the moment. 

Grab Your FREE 5 Rules for Trading Stock Trends Report

1606854690

 




 
Special Offers from Schaeffer's Trading Partners