Earnings Miss Pressures Chip Stock to 2-Year Lows

ON Semiconductor Corp (NASDAQ:ON) stock is down 5.1% to trade at a two-year low of $48.55 at last check, after the chip concern missed top- and bottom-line estimates for the fourth quarter and issued a dismal fiscal first-quarter forecast. The company attributed the lackluster results and outlook to weaker demand from automakers.

ON carries a 39.7% year-over-year deficit, and is gapping below recent support at the $50 level, after failing to conquer its 20-day moving average in the previous session. Shares are fresh off a third-straight weekly loss, and eyeing their biggest single-day percentage dip in a month.

Short sellers are building their positions. Short interest added 8.7% in the last two reporting periods, and the 28.48 million shares sold short make up 6.7% of the stock's available float.

At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ON's 50-day put/call volume ratio of 1.75 sits higher than 92% of readings from the past year. This indicates traders have been much more bearish than usual.

Options bears are doubling down today, with 17,000 puts exchanged so far today, which is 10 times the volume typically seen at this point. The most popular contract is the March 40 put, with new positions being sold to open there.