By Karee Venema / October 19, 2017 / www.schaeffersresearch.com /
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Apple stock is spiraling today -- the worst Dow stock so far -- amid concerns for iPhone 8 demand and Apple Watch cellular connection failures in China. Against this backdrop, it's not too surprising to see a number of Apple suppliers on the decline, too, with chip stocks Advanced Micro Devices, Inc. (NASDAQ:AMD), Broadcom Ltd (NASDAQ:AVGO), and Qorvo Inc (NASDAQ:QRVO) all trading in the red. Here's a closer look at how shares of AMD, AVGO, and QRVO are performing and how options traders are reacting.
Advanced Micro Devices Options Traders Shake Off Apple Slump
Advanced Micro Devices stock was last seen down 1% at $13.95. Nevertheless, the stock has put in a strong performance over the long term, up 106% year-over-year. Plus, a recent pullback from AMD's July 26 decade high of $15.65 found reliable support atop its 200-day moving average -- a potential
"buy" signal based on previous occurrences.
AMD options traders don't appear bothered by today's retreat. While roughly 64,000 options have changed hands -- slightly below what's typically seen -- the October 14 call is most active. It looks like traders may be buying to open new positions here, betting on Advanced Micro Devices shares to bounce back above $14 by front-month options expiration at tomorrow's close.
Broadcom Options Traders Target New Highs
AVGO shares were down as much as 2.2% earlier, but were last seen off 0.7% at $242.24. Longer term, the stock has surged more than 41% in the past 12 months, thanks to several bounces off its 160-day moving average. This trendline -- which is perched just below Broadcom stock's current perch -- served as a springboard after the equity's retreat from its Aug. 24 record high of $259.36.
Today, put volume is trading at a slightly accelerated clip, though calls are still in the lead on an absolute basis. Longer term, AVGO stock has been a popular target among options traders, with 274,367 contracts open -- in the 100th annual percentile. Breaking it down even further, call open interest accounts for 168,769 contracts while put open interest is made up of 105,598 contracts. The November 260 call is home to peak open interest of 13,810 contracts, and it looks like most of the positions were bought to open in late September.
Qorvo Stock Nears Support at Key Trendline
Qorvo stock has plunged 3.6% to trade at $69.42, but could find a foothold near its 180-day moving average. This trendline has contained several of the security's pullbacks since it topped out at an annual high of $79.34 on May 31. More broadly, QRVO shares are maintaining a 28% year-over-year lead.
While options activity today is running at below-average levels, total open interest on QRVO is perched at a 52-week high of 54,911 contracts. Calls outpace puts 33,463 contracts to 21,448, with peak front-month open interest located at the October 75 call. Data points to a mix of buy- and sell-to-open activity here. While call buyers are hoping for a big rally through tomorrow's close, call sellers are hoping for more Apple-related struggles in the near term.