2 Stocks to Watch as Apple Shares Sell Off – Schaeffers Research (blog)

With Apple stock in the middle of a substantial pullback, a number of the company’s suppliers are also taking a tumble. For example, circuit specialist Cirrus Logic, Inc. (NASDAQ:CRUS) and chipmaker Broadcom Ltd (NASDAQ:AVGO) are both lower today, and options trading is accelerated on both stocks. Plus, CRUS and AVGO stocks are both testing notable levels on the charts. 

Put Players Pounce on CRUS Stock

Cirrus Logic put options are trading at three times the expected pace today, with put volume doubling call volume. This skew is due to heavy interest in the June 65 put, which is by far the most popular CRUS option today. Data suggests traders could be buying to open positions here, hoping to profit on a steeper drop in the shares. 

Looking back, put buying is certainly not the norm on CRUS stock. This is according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which shows a 50-day call/put volume ratio of 1.36 — in the 75th annual percentile. In other words, calls have been bought to open over puts at a faster-than-usual clip.

Cirrus stock actually touched an all-time high of $71.97 on Friday, but the shares were last seen trading at $64.77, down 3.8% on the day. However, CRUS has found a foothold atop its 50-day moving average, a level that contained a pullback in mid-May. Plus, CRUS stock earlier bounced from a familiar level that aligns with a 50% Fibonacci retracement of its rally since February, and is now trading above a 38.2% Fibonacci retracement of this surge. 

cirrus logic stock

AVGO Stock Bounces From Key Level

In Broadcom’s options pits, puts and calls are both trading at an accelerated pace, with roughly 25,000 contracts on the tape. In the lead is the June 240 call, and ISE data confirms some buy-to-open activity here, meaning traders are betting bullishly on AVGO stock ahead of expiration at the close on Friday, June 16. Also seeing heavy action is the longer-term October 230 put, but it looks like these options may be tied to stock.

Coming into today, short-term options traders have taken a slightly heavier-than-usual call-skewed approach. Broadcom has a Schaeffer’s put/call open interest (SOIR) of 0.89, which ranks in the 44th annual percentile. Either way, now’s a good time to buy near-term AVGO options, according to the stock’s Schaeffer’s Volatility Index (SVI) of 28%, which ranks in the 28th annual percentile. This suggests low volatility expectations are being priced into near-term options. 

On the charts, AVGO stock earlier bounced from from the $236.80 area, which is home to a 23.6% Fibonacci retracement of the stock’s year-to-date rally, and the shares were last seen back atop the round $240 level, at $240.97. At the same time, Broadcom stock remains on pace for just its second close below its 20-day moving average since late April. 

broadcom stock

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