Stock Options Watch: RFMD, AVGO

RFMD – RF Micro Devices, Inc. – Bearish activity in RF Micro Devices options this morning suggests one trader is bracing for shares in the name to potentially decline substantially during the next six weeks. The stock has moved higher in recent months, up more than 10% year to date. Shares today are down 0.60% at $5.10 as of 12:10 p.m. ET. May expiry put buying on RFMD may be looking for the stock to pullback following the company’s fourth-quarter earnings report later this month. Upwards of 6,600 puts were purchased at the May $5.0 strike at a premium of $0.35 each during the first hour of the trading session. The bearish stance on RF Micro Devices makes money at expiration if shares in the semiconductor components maker drop 9% from the current level to settle below the breakeven price of $4.65.

AVGO – Avago Technologies Ltd. – Put options changing hands on semiconductor devices maker, Avago Technologies, in the early going this morning look for the price of the underlying to pull back to the lowest level in several weeks. Shares in AVGO are up 0.15% on the day at $34.37 as of 12:40 p.m. ET. Overall options volume on Avago jumped to more than 8 times the stock’s average daily volume and the put/call ratio on the stock surged to more than 160 after one or more traders snapped up May expiry puts this morning. The May $32.5 strike put traded more than 4,200 times during the first half of the session against open interest of just 43 contracts, with the bulk of the volume purchased at an average premium of $0.70 each. The bearish contracts make money if shares in Avago Technologies decline 7.5% from the current price of $34.37 to breach the average breakeven point on the downside at $31.80 by May expiration. The $32.5 strike put options expire the week prior to Avago’s second-quarter earnings report seven weeks from now.

About Caitlin Duffy 373 Articles

Affiliation: Interactive Brokers

Caitlin Duffy joined Interactive Brokers in 2009. In her role as Equity Options Analyst, Caitlin provides daily market commentary; highlighting various options trades, trading patterns and strategies of interest. Through Interactive Broker's webinar program, Ms. Duffy presents a number of educational, options-related events describing the theoretical pricing of options, the option Greeks as well as options strategies.

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