Susquehanna sees cautious semiconductor stock options activity

Investing.com - Susquehanna observed cautious near-term options flow in the VanEck Semiconductor ETF (ARCA: SMH) on Wednesday, including buyers of 6,000 October 605/575 put spreads, 10,000 October 23 590 puts, and 5,000 October 23 605/570 put spreads.

The firm noted potential catalysts in the semiconductor space over the next 2.5 weeks include Samsung's earnings report on Thursday, Applied Materials' Investor Day on October 13, ASML's earnings report on October 14, Taiwan Semiconductor Manufacturing's earnings report on October 15, and Semicon West from October 13-15. Additional events include Lam Research's earnings report on October 21, Texas Instruments' earnings report on October 21, Nvidia's GTC Berlin event from October 20-22, and the CPI report on October 14.

Susquehanna also saw notable near-term volatility buying in the DRAM ETF on Wednesday, where an investor bought 6,000 Friday 59 put/62 call strangles ahead of Samsung's earnings release. The firm reiterated its pitch for SMH options on Wednesday, focusing on regular October options where the straddle trades around 3.6%.

The firm highlighted a recent trend of November call spread buying across Alphabet (NASDAQ: GOOGL), Walmart (NYSE: WMT), and most recently SPCX. The firm grouped these trades together given the size of the flows, the focus on November options, the apparent targeting of earnings, and the fact that each trade involved an outlay of approximately $13-14 million in premium.

Susquehanna said it continues to favor the call spread strategy as a way to set up limited-risk upside exposure, noting that single-stock volatility has declined from recent highs and skew levels remain generally low or flat.

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