Options Activity for Cypress Semiconductor (CY), First Solar (FSLR) and Kinross Gold (KGC)
Friday, September 17, 2010



I hope that your trading is going well, as I know that members of S.O.M.E. are making the most of the market movements and their returns.



Today's newsletter includes a look at a rise in put trading on Cypress Semiconductor (CY), and a rise in call trading on First Solar (FSLR) and Kinross Gold (KGC). The purpose of this newsletter is to focus on stocks seeing heavy options trading and gives you a unique insight into each stock's sentiment backdrop.

Cypress Semiconductor (CY)

Options players jumped on Cypress Semiconductor Corp. (CY) on Thursday, as more than 46,800 contracts crossed the tape. This surge in volume was more than eight times the stock's average daily trading volume of 6,026 contracts, according to data from WhatsTrading.com. In addition, investors were feeling bearish, as 98% of the volume changed hands on the put side.



Options players have shown a definite preference for puts recently. The International Securities Exchange (ISE) has reported nearly two puts purchased to open for every one call purchased to open during the past 10 trading sessions. This ratio of puts to calls is higher than 86% of all those taken during the past 12 months.

What's more, the put/call open interest ratio (SOIR) for CY comes in at 3.60, as put open interest more than triples call open interest among options slated to expire in less than three months. This ratio of puts to calls is higher than 89% of all those taken during the past 12 months, pointing to a rising pessimism.

Short sellers are also flocking to the security. During the past month, the number of CY shares sold short increased by 16% to 13 million. This accumulation of bearish bets is nearly five times the stock's average daily trading volume and accounts for 8.6% of the company's total float. An unwinding of these pessimistic positions could fuel a significant rally in the shares.

Wall Street has yet to completely jump on the stock's bandwagon. According to Zacks, seven of the 17 analysts covering the security have given the stock a "hold" or worse rating. Any upgrades from this group could help to boost the security higher.

From a technical perspective, the shares of CY are up more than 14% since the beginning of the year and are attempting to resume their long-term uptrend. The stock has bounced off support in the 10 region and climbed back above its 10-week and 20-week moving averages, leaving them poised to form a bullish cross. These trendlines have helped to guide the shares higher on numerous occasions since December 2008.



First Solar (FSLR)

In the wake of an upbeat analyst endorsement, First Solar Inc. (FSLR) was the center of some heavy options trading on Thursday, as more than 45,900 contracts changed hands. This surge in volume was more than double the stock's average daily trading volume of 16,211 contracts, according to data from WhatsTrading.com. In addition, approximately 53% of the volume crossed the tape on the call side.





Yesterday's preference for calls runs counter to the trend seen on the ISE. During the past two trading weeks, 1.9 puts have been purchased to open for every one call purchased to open. This ratio of puts to calls is higher than 79% of all those taken during the past 12 months, pointing to a rising pessimism. What's more, the SOIR for FSLR comes in at 1.26, as put open interest outnumbers call open interest among options slated to expire in less than three months. This ratio of puts to calls is higher than 55% of all those taken during the past 52 weeks.

Short sellers have placed some heavy bets against a rally in the shares. More than 10 million shares have been sold short, accounting for 19.5% of the company's total float. In addition, it would take nearly nine days for traders to buy back these pessimistic positions, at the stock's average daily trading volume. Should the bears begin to unwind these short positions, it could fuel a significant rally in the shares.

Technically speaking, the shares of FSLR are up more than 6% since the beginning of the year. The equity has bounced back from its double bottom in the 100 region, and is edging higher with help from its 10-week and 20-week moving averages. The stock has also broken above former resistance at the 140 level.



Kinross Gold (KGC)

Gold miner Kinross Gold Corp. (KGC) was the focus of some brisk options activity yesterday, as more than 44,400 contracts changed hands. This jump in volume was three times the stock's average daily trading volume of 15,088 contracts, according to data from WhatsTrading.com. Furthermore, roughly 70% of the volume crossed the tape on the call side.



Yesterday's affinity for calls was nothing new for KGC, though. The ISE has reported nearly 21 calls purchased to open for every one put purchased to open during the past 10 trading sessions. This ratio of calls to puts is higher than 96% of all those taken during the past 12 months.

There is still ample room for optimism to grow. The SOIR for KGC comes in at 0.55, as call open interest easily outnumbers put open interest among options slated to expire in less than three months. This ratio, however, is higher than 62% of all those taken during the past year, pointing to some lingering pessimism among options players.

Meanwhile, Wall Street has a slightly bullish slant. Zacks reports that the stock has earned 12 "buy" ratings, seven "holds," and one "strong sell." There is still room for potential upgrades should the security continue its recent winning ways.

From a technical perspective, the shares of KGC recently bounced off the 15 level, ending a year-long downtrend. KGC is up nearly 1% since the start of 2010. The equity has moved back above resistance at its 10-week and 20-week moving averages, but it is facing resistance at the 19 level.





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