Enormous Prints in Put Options on Tech. Select Sector SPDR Fund
by Option Review - October 27th, 2010 4:35 pm
Today’s tickers: XLK, ENR, IYR, ALTR, AVP, JCP & TQNT
XLK - Technology Select Sector SPDR Fund – One big options market participant traded a total of 524,600 put options on the technology SPDR ETF this afternoon. It looks like the party responsible for the massive transactions rolled a previously established debit put spread in the December contract forward to the longer-dated March 2011 contract. Shares of the XLK, an exchange-traded fund that mirrors the performance of the Technology Select Sector of the S&P 500 Index, are down slightly by 0.20% to stand at $24.19 as of 2:15 pm in New York. The XLK jumped to the top of our ‘most active by options volume’ scanner after the 112,300-lot December $23/$20 put spread was sold for a net $0.31 per contract. This spread appears to have been initially purchased for a net premium of $0.68 each back on October 7, 2010, when the price of the underlying fund was trading around $23.14. Today, the XLK-options player sold the massive spread in order to purchase an even larger one at the same strike prices in the March 2011 contract. The new put position involved the purchase of 150,000 lots at the March 2011 $23 strike for a premium of $0.96 each, and the sale of the same number of puts at the lower March $2011 $20 strike at a premium of $0.31 apiece. In isolation, the net cost of buying the longer-dated put spread amounts to $0.65 per contract and yields downside protection for the investor should shares of the XLK trade below the breakeven price of $22.35 by March expiration. Enormous trades such as these tend to be tied to stock. Perhaps this trader is augmenting the size of the put spread because he has increased his exposure to the technology sector. Around the same time the puts were bring traded, some 733,000 shares of the underlying were purchased for $24.12 each. We note, however, that at this time there is no way…
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RF Semi Stocks Back in Institutional Favor – Upgrades for RF Micro Devices (RFMD) and TriQuint Semiconductor (TQNT)
by Chart School - December 2nd, 2009 11:06 am
RF Semi Stocks Back in Institutional Favor – Upgrades for RF Micro Devices (RFMD) and TriQuint Semiconductor (TQNT)
Courtesy of Trader Mark at Fund My Mutual Fund
We mentioned Skyworks Solutions (SWKS) had broken out yesterday but its peers were still under resistance levels. That is no longer an issue as both TriQuint Semiconductor (TQNT) and RF Micro Devices (RFMD) received upgrades today and the computers are rushing in as technical resistance has been blasted through. This still remains one of my favorite spaces for the move into the smart phone culture, along with a backdoor play on the smart grid.
Unfortunately, the moves have been so dramatic the age old question of "chase or not to chase" is upon us. In this market it’s not a hard question – you chase everything.
- RF Micro Devices (RFMD) are trading higher this morning after UBS analyst Uche Orji raised his rating on the mobile phone chip maker to Buy from Neutral; he keeps his $5.50 price target.
- Orji cites three reasons for the more bullish stance:
- With an improving balance sheet, risk profile has improved.
- New products for the handset and other markets should drive margins, revenue higher.
- Current P/E at 10.6x next 12 months looks attractive given 5-year average of about 18x.
- He writes in a research note that checks from the handset food chain indicate continued strong demand with no signs of inventory build.
- TriQuint Semiconductor (TQNT) shares are on the rise this morning after Pacific Crest analyst Nathan Johnsen lifted his rating on the chip company’s stock to Outperform from Sector Perform, setting a price target of $7. Yesterday, the stock closed at $5.67.
- “Recent meetings with TriQuint management have allowed us to more fully appreciate the potential opportunities for TriQuint’s networks business in 2010,” he writes. While the company’s handset business remains a risk given expected pricing pressures, he thinks that the networks segment could be an offset.
- Johnsen upped his 2010 EPS estimate to 49 cents, from 39 cents; he’s now in line with the Street.
- The analyst contends that with TriQuint trading at 11.6x his 2010 forecast, the stock is undervalued.
No positions but mulling.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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