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Cypress Semiconductor Corporation (NYSE: CY) joined the parade of companies reporting their latest quarterly results today. The firm swallowed a second-quarter loss of $45.3 million, or 32 cents per share. Excluding items, CY recorded a net loss of just 3 cents per share, besting analysts' consensus expectations for a loss of 9 cents per share. Revenue also came in better than expected, arriving at $155.8 million, compared to Wall Street's forecast of $152.0 million.
In the wake of this upside surprise, CY surged to a new multi-decade high of $9.83 early in today's session. It seems that bearish bettors were caught off-guard by the stronger-than-expected results; during the 10 days leading up to the report, option traders on the International Securities Exchange (ISE) bought to open 6.75 times more puts than calls on CY. Speculative investors on the ISE have purchased the stock's puts over calls at faster pace just 3% of the time.
Plus, short interest is also heavy. The number of CY shares sold short rose by 37.8% during the past month, and now accounts for a whopping 17.4% of the equity's available float. At the stock's average daily trading volume, it would take more than seven days for all of these shorts to cover their positions.
We're likely seeing some of that downbeat sentiment start to unwind in today's session, with CY up 1.5% at last check. The post-earnings pop continues the semiconductor issue's impressive technical outperformance. The shares have added 116% year-to-date, buoyed by solid support at their 10-week and 20-week moving averages. If pessimistic traders capitulate to the stock's strength, additional gains are a likely prospect for Cypress Semi.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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