Chip rebound sparks hedging flurry from traders

Traders work on the floor of the New York Stock Exchange. NYSE When it comes to chipmakers, traders are ordering à la carte and shorting the buffet. Put volume more than doubled that of calls Monday morning in the VanEck Semiconductor ETF (SMH) , with more than half of total premiums tied to puts. Of that, more than 10% of the $217 million in premium exchanging hands did so in the 550-puts expiring Aug. 21. That level represents a 7% drop from current levels, showing traders are skeptical of the chip ETF's Monday bounce of more than 5%. Stock Chart Icon Stock chart icon The VanEck Semiconductor ETF (SMH) in the past five trading days Despite the overall bearish sentiment on the group, traders placed several bullish bets on potential winners. For example, in Marvell Technology , calls outnumbered puts three to one, and more than 80% of premiums. The action follows the S&P Dow Jones Indices announcing the chipmaker will be included in the S&P 500 on June 22. Call buyers in Marvell were largely targeting the $300 level in the stock across June, July and September expirations. Those at-the-money bets are not cheap to make. Thirty-day implied volatility in Marvell is in the 98th percentile, meaning premiums are highly elevated thanks to the stock's recent rip higher. "Even for a volatile index like the [ PHLX Semiconductor Index ], the last two weeks have been pretty crazy," said Bespoke co-founder Paul Hickey. …