Options surge follows stock sell-off
- TER stock quiet Wednesday after Tuesday drop
- Stock near lowest level of past 16 months
- Put options volume more than 41 times avg.
Just because a stock isn’t doing much doesn’t mean traders aren’t taking positions.
On Tuesday, Teradyne (TER) shares fell to their lowest level since November 2023, closing down a little more than 17% after the semiconductor support company updated its forward guidance:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Where Teradyne had previously seen “improving conditions” for 2025, it now expected “short-term volatility” (primarily in its semiconductor testing business), and flat-to-lower revenue in Q2. The company also cited uncertainty about US trade policy in downgrading its outlook.1
Yesterday saw TER moving in and out of positive territory for much of the day, while options traders were most active in puts, where volume was more than 41 times average by midday. One of the larger trades was in the April $90 puts, which had volume around 7,400 contracts vs. open interest (OI) of 7,600:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Despite the recent sell-off, the options’ price chart supports a possible contrarian interpretation of yesterday’s activity. The fact that nearly the same number of contracts traded on March 5 (when TER closed 26% higher than it did on Tuesday) makes a good argument that a large trader bought these options on March 5 and sold them (or most of them) on Wednesday. Around midday, the $90 puts were trading around $6.61, more than six times their March 5 closing price.
A similar scenario may have played out in the June $70 puts, which had volume of 9,100 on Wednesday vs. OI of 22,200.
Of course, if the OI in these contracts is higher today than it was yesterday, the contrarian argument looks less convincing. Nonetheless, when traders exit put positions, it’s possible sentiment is shifting in a more bullish direction, even if that may not be reflected in the stock’s price action.
Today’s numbers include (all times ET): weekly jobless claims (8:30 a.m.), producer price index (8:30 a.m.), EIA Natural Gas Report (10:30 a.m.).
Today’s earnings include: Dollar General (DG), Duluth (DLTH), DocuSign (DOCU), Ulta Beauty (ULTA).
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1 Barron’s. DJ Teradyne Stock is Today's Worst Performer in the S&P 500. Tariffs Are 1 Reason. 3/11/25.