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Option Activity for Cirrus Logic Inc. (CRUS)June17,2010 - Cirrus Logic (CRUS) is up nearly 10 percent to $17 and 7,455 calls traded in the Austin, TX chipmaker after Mad Money’s host Jim Cramer said that, at $15 per share, the stock isn’t done going higher. He had an interview with CRUS President and CEO Jason Rhode. Shares are rallying today and most of the options action is in July, Sep and Dec 15 and 17.5 call options. Implied volatility is up about 5 percent to 64. The shares of chipmaker Cirrus Logic Inc. (CRUS) rode upbeat data from Apple Inc. (AAPL) to a fresh eight-year high on Wednesday, after the firm's occasional business partner saw "overwhelming" demand for its new iPhone 4. (According to a recent regulatory filing, Apple accounted for roughly 36% of Cirrus Logic's sales for the fiscal year ended March 27.) However, judging by yesterday's action in the options pits, some traders are expecting CRUS to assail even loftier heights in the intermediate term. By the closing bell, the security saw almost 4,400 calls cross the tape – almost doubling its expected single-session volume of about 2,300 contracts. Garnering noteworthy attention was the out-of-the-money September 17.50 call, which saw close to 1,000 contracts change hands – 83% of which traded at the ask price, suggesting they were bought. Furthermore, call open interest at the September 17.50 strike ballooned overnight, hinting at a batch of newly added bullish bets.
However, despite CRUS' quest for new highs lately, yesterday's affinity for optimistic positions runs counter to the growing trend on the International Securities Exchange (ISE). Specifically, the stock's ISE 10-day put/call volume ratio of 0.13 stands in the 86th annual percentile, implying that speculators on the exchange have initiated bearish bets over bullish at an accelerated pace during the past couple of weeks. Near-term options players have been more pessimistically positioned toward CRUS only one-quarter of the time during the past 12 months. As alluded to earlier, the shares of CRUS have been outstanding on the charts, outperforming the broader S&P 500 Index (SPX) by a whopping 104.6% during the past 60 sessions. In fact, the security has advanced more than 245% during the past 52 weeks, guided into the black atop its 10-week and 20-week moving averages. Nevertheless, with CRUS now lingering in the $16.50 neighborhood, this duo of trend lines has a way to go before catching up.
Should the shares of CRUS continue to pick up steam on the charts, the skepticism in the options pits could unwind – which could add even more fuel to the outperformer's fire. Furthermore, the security could get an added boost from the analyst crowd, should a slew of brokerage firms update their price targets in light of the stock's string of new highs. According to Thomson Reuters, the average 12-month price target on the equity stands at $15.60, representing a discount to CRUS' new peak of $16.75. .
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