NXP Semiconductors will post a profit for the first quarter next Monday
The shares of NXP Semiconductors NV (NASDAQ: NXPI) have been on the charts for a full year, rising since their low in March 2020 and more than doubling in the past 12 months. While security has suffered many setbacks along the way, multiple levels of support, including the 60- and 80-day moving averages, have held significant losses in check. And while the security was in sell-off mode this month after hitting a new all-time high of $ 216.43 on April 5th, a new level of support has just emerged that has been historically bullish for NXPI.
According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, NXPI has just pulled back to its 40-day moving average after a long period above the trendline. White’s study shows that security has been within one standard deviation of this key level 15 times over the past three years, with 79% of the time achieving a positive return of one month. NXP Semiconductors stock saw an average pop of 6.1% a month after those signals. A similar move would take the stock from its current price of $ 199.01 to $ 211.15 – on track to regain its high in early April.
The company will post its first quarter results after the close of trading on Monday April 26, which could also help move stocks. The stock has seen positive moves post-earnings in the past, with all but two of the last eight post-earnings sessions ending higher. Over the past two years, NXPI has seen an average post-profit gain of 3.6% regardless of direction, but this time the option pits are pricing in a much larger move of 6.8%.
Option bulls also come out of the wood before the event. To date, 11,000 calls have crossed the band – three times the intraday average – compared to just 930 puts. By far the two most popular contracts are the weekly 4/30 call with 215 strikes and the weekly call with 200 strikes from the weekly series 4/23, with positions being opened on the former. That means these traders expect even more upside for NXP Semiconductors stock following the company’s earnings report next week.
There is still room to move into the next step of NXPI with options. The Schaeffer volatility index (SVI) of the security of 38% is over 11% of the measured values of the last 12 months. This means that option players are currently pricing in relatively low volatility expectations.