(Written by Alexander Crawford. Options data sourced from Schaeffer’s.)
For a look into the tech sector, one telling indicator is a stock’s ratio of open interest put options to call options (the “put/call”). This ratio gauges how many option positions are bearish on the stock relative to how many are bullish. Since put options are a bearish position, the higher the put/call, the more bearish the option market’s sentiment on the name.
Why is this a helpful data point? Changes in a stock’s put/call over time can indicate whether options traders (which are generally considered to be sophisticated investors) are becoming more bullish or bearish on the company’s outlook. This is helpful information to prospective investors that want to get in at a good time.
To illustrate this idea, we ran a screen on the tech sector for the top 10 stocks seeing the most bullish changes in sentiment from options traders, with the largest decreases in put/call over the last 10 trading days.
Do you think these stocks will outperform like options traders predict? Use this list as a starting point for your own analysis.
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List sorted by decrease in put/call ratio.
1. Benchmark Electronics Inc. (BHE): Provides electronics manufacturing services in the Americas, Asia, and Europe. Market cap of $760.70M. Put/call ratio decreased from 11.54 to 0.34 between 10/27 and 11/09, a decrease of 97.05%.
2. Ansys, Inc. (ANSS): Engages in the development and marketing of engineering simulation software and services used by engineers and designers in aerospace, automotive, manufacturing, electronics, biomedical, energy, and defence industries. Market cap of $5.42B. Put/call ratio decreased from 4.64 to 0.26 between 10/27 and 11/09, a decrease of 94.40%.
3. Synchronoss Technologies, Inc. (SNCR): Provides on-demand transaction, content, and connectivity management platforms that enable communications service providers, cable operators/multi-services operators, original equipment manufacturers, and e-Tailers/retailers with embedded connectivity primarily in North America. Market cap of $1.18B. Put/call ratio decreased from 1.02 to 0.09 between 10/27 and 11/09, a decrease of 91.18%.
4. Taleo Corp. (TLEO): Provides on-demand talent management software solutions. Market cap of $1.39B. Put/call ratio decreased from 0.66 to 0.06 between 10/27 and 11/09, a decrease of 90.91%.
5. NIC Inc. (EGOV): Provides eGovernment services that enable governments use the Internet to provide various services to businesses and citizens in the United States. Market cap of $855.52M. Put/call ratio decreased from 0.43 to 0.05 between 10/27 and 11/09, a decrease of 88.37%.
6. iGATE Corporation (IGTE): Provides outsourced information technology (IT) and IT-enabled operations, solutions, and services. Market cap of $850.28M. Put/call ratio decreased from 0.53 to 0.07 between 10/27 and 11/09, a decrease of 86.79%. The stock is a short squeeze candidate, with a short float at 7.14% (equivalent to 7.42 days of average volume).
7. Plexus Corp. (PLXS): Provides contract electronic manufacturing services to original equipment manufacturers and other technology companies. Market cap of $856.25M. Put/call ratio decreased from 0.42 to 0.07 between 10/27 and 11/09, a decrease of 83.33%.
8. InfoSpace, Inc. (INSP): Develops search tools and technologies that assist consumers with finding content and information on the Internet. Market cap of $330.38M. Put/call ratio decreased from 0.53 to 0.09 between 10/27 and 11/09, a decrease of 83.02%.
9. Advanced Energy Industries, Inc. (AEIS): Designs, manufactures, sells, and supports industrial power conversion products that transform power into various usable forms. Market cap of $394.69M. Put/call ratio decreased from 0.72 to 0.21 between 10/27 and 11/09, a decrease of 70.83%.
10. VeriSign, Inc. (VRSN): Provides Internet infrastructure services to various networks worldwide. Market cap of $5.27B. Put/call ratio decreased from 0.72 to 0.28 between 10/27 and 11/09, a decrease of 61.11%.
Interactive Chart: Press Play to see how analyst ratings have changed for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
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