Are you looking to get involved in the technology industry? If so, keep an eye out for Applied Optoelectronics (NASDAQ:$AAOI), which is a communications equipment company, as they have been exceptional both on and off the charts. On June 6, the AAOI stock rallied from $11 in 2016 to a record high of $75.59. This gain is likely because of Applied Optoelectronics advanced growth, with their quarterly revenue doubling year-over-year in Q1. As a matter of fact, the AAOI stock has obtained single-day gains of 19.5% and 22.7% in the period following the company’s latest two quarterly reports. That said, there are a number of bearish traders who are continuing to target the shares.
So far, it has been the consistency of short sellers that has been most notable. In the last two reporting periods, for instance, short interest increased by 67.5% and it now stands at record highs. Interestingly, nearly half of AAOI’s float is committed to short interest, thus setting up a potential short-squeeze situation which could help the stock expand its run into record-high territory.
If you look at the options pits, you will see similar circumstances. Over the past two weeks, according to data pulled from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AAOI put buying has been more popular than call buying. Additionally, AAOI’s Schaeffer’s put/call open interest (0.92) ranks in the 84th annual percentile. This means that open interest among options expiring within three months is far less call-distorted than normal.
Despite six out of seven covering brokerage firms rating AAOI as a “strong buy”, there are a number of analysts who might need to rearrange their mindset sooner rather than later. For instance, these shares are verging their average 12-month price target of $78.14.
All in all, Applied Optoelectronics is an attractive route to take for investors looking to invest in technology. Why? Because AAOI has a Schaeffer’s Volatility Scorecard of 96, thus illustrating that the stock has made far bigger-than-expected moves on the chart of the past year.
Featured Image: Twitter
