By Karee Venema / September 20, 2017 / www.schaeffersresearch.com /
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Shares of Apple Inc. (NASDAQ:AAPL) are taking a hit today, after the tech giant reported connectivity issues with its new Apple Watch. AAPL stock's 2% drop is dragging down the shares of Apple suppliers, too, including Qorvo Inc (NASDAQ:QRVO) and Western Digital Corp (NASDAQ:WDC). QRVO and WDC were already staring down historical headwinds, considering they are two of the worst stocks to own during Fed week. Here's a closer look at how QRVO and WDC are faring, and how options traders have been positioning themselves on the tech stocks.
Put Buyers Have Been Blasting Qorvo Shares
Qorvo shares are down 3.6% to trade at $71.63, bringing their week-to-date deficit to 4.7%. Since 2015, though, the stock has tended to struggle during weeks the Federal Reserve hosts its policy-setting meeting -- shedding an average of 2.2% and finishing the week in positive territory just 38% of the time, according to Schaeffer's Senior Quantitative Analyst Rocky White.
Longer term, QRVO's pullback from its May 31 annual high of $79.34 was contained by its 200-day moving average in early July. Since bouncing from this trendline, Qorvo stock has hit a series of higher lows, and is maintaining a 35.9% year-to-date lead.
Options traders have taken the bearish route toward QRVO in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 2.02 ranks in the 86th annual percentile, meaning puts have been bought to open over calls at a faster-than-usual clip.
The October 65 put has seen the biggest rise in open interest over this time frame, and data from
Trade-Alert indicates significant buy-to-open activity here. If this is the case, the goal is for QRVO to breach the 65 strike by the close on Friday, Oct. 20 -- when the series expires.
Toshiba News Weighs on Western Digital Stock
WDC shares are trading down 4.8% today at $85.62, swinging into the red on a week-to-date basis. Also weighing on the tech name is news Toshiba will sell its chip unit to a group led by Bain Capital, considering Western Digital was recently thought to be the top suitor for the
buyout.
While the shares could find a foothold atop their 180-day moving average -- a trendline that caught last week's pullback -- Fed-week history isn't on their side. Going back to 2015, WDC stock has averaged a loss of 1.6% in weeks the Federal Open Market Committee (FOMC) meets, and has finished the week negative two-thirds of the time.
Despite today's sharp drop, though, WDC remains 26.1% higher year-to-date. And while short sellers have been raising the bearish stakes of late -- short interest surged 88% in the two most recent reporting periods -- options traders at the ISE, CBOE, and PHLX have bought to open 2.38 calls for every put in the past 20 sessions.
In the last 10 days, specifically, the October 87.50 and 90 calls have been targeted by call buyers. By doing so, the options traders expect WDC to resume its longer-term uptrend over the next several weeks.