BMO last week cut the semiconductor sector to "underperform"
from "market perform," citing rising inventories and weakening
demand. Among the recipients of this sector-wide downgrade was
Altera Corporation (
). Analysts at S&P Equity followed suit on Friday, cutting ALTR
from a "buy" to a "hold." All in all, 10 brokerage firms now deem
ALTR a "hold," compared to 11 "buy" or better ratings. Going
forward, ALTR could be vulnerable to additional downgrades from
this bullish bunch, given the recent trend.
Meanwhile, option players remain optimistic toward the
semiconductor stock. In the past two weeks, traders on the
International Securities Exchange (ISE) and Chicago Board Options
) have bought to open 2.2 calls for every one put, a ratio which
ranks above 65% of all other readings taken during the past 12
Echoing this bullish bias, ALTR's Schaeffer's put/call open
interest ratio (SOIR) -- which measures put open interest relative
to call open interest among options with less than three months
until expiration -- stands at 0.63, in the 12th annual percentile.
In other words, short-term option players have been more
optimistically aligned toward the shares just 12% of the time
during the last year.
However, this preference for calls may be starting to shift. So
far today, 5,123
have crossed the tape -- more than three times the equity's
expected single-session put volume of just 1,391 contracts.
Meanwhile, just 509 calls have changed hands on ALTR.
By far, the September 25 put has been most popular today, with
2,250 contracts traded -- the bulk of which changed hands at the
ask price, indicating they were likely purchased. However, with
roughly 3,600 contracts open at this strike, it's difficult to
determine whether these puts are, in fact, fresh positions. With
ALTR currently trading at $25.18, though, these puts are right at
For the record, both peak put open interest and peak call open
interest for the September series can be found at the 23 strike. By
comparison, the 28 strike houses both peak put open interest and
peak call open interest for the August series. In other words, it
seems that both put and call players are lowering their
expectations for ALTR, at least in the near term.
This isn't entirely surprising, from a technical perspective.
Following last week's round of downgrades, ALTR slipped several
points lower -- adding to its latest decline. The stock had spent
the past few weeks challenging resistance at its 10-day and 20-day
moving averages; however, ALTR is now several points beneath this
Furthermore, these trendlines recently completed a bearish
cross, suggesting that ALTR's technical troubles could
Should the recent round of analyst downgrades prove to be just
the tip of the iceberg, today's heavy put volume could be the just
the start of a growing trend, helping to accelerate the stock's
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