The shares of semiconductor name Ambarella Inc (NASDAQ:AMBA) are experiencing a heavy drop today, after the company's disappointing second-quarter outlook. Keybanc downgraded the stock to "sector weight" from "overweight" in response, while no fewer than five other analysts slashed their price targets. At last glance, AMBA was down 16.1% to trade at $68.78.
Today's drop has AMBA on track to snap its three-day win streak, and moving back below its 100-day moving average after breaking above it last session. A short-term drop could've already been in the cards, as the stock's 14-day relative strength index (RSI) of 82.6 sits in "overbought" territory. Year-to-date, the equity is down 17%.
Options traders are chiming in at eight times the usual daily volume already, with 5,549 calls and 4,357 puts exchanged so far. Expiring at the end of this week, the weekly 6/2 82-strike call is the most active, with new positions being bought to open there. It's also worth noting that Ambarella stock has landed on the short sell restricted (SSR) list amid the volatility.
Options traders were particularly bullish leading up to the earnings event, per AMBA's 50-day put/call volume ratio of 4.48 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than 97% of readings from the past year.
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