Breakouts Enhancing Premiums
Because volatility
has been low up until the last two days, large option
premiums have been scarce. The recent breakout in the Nasdaq
has led to several similar moves in individual stocks.
Broadvision
(
BVSN |
Quote |
Chart |
News |
PowerRating) may present a good opportunity for
covered calls. You can buy the stock for 61 1/2, and you can
sell the August 65 calls for 7 3/8. This will put your cost
basis just under near-term support, which may be found at
the top of the former trading range. This represents a 17.7%
return if the stock is called away. More aggressive traders
should also look into the August 70 calls.
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Newport
Corporation
(
NEWP |
Quote |
Chart |
News |
PowerRating) broke out three weeks ago, thanks to
a gap up. You can buy the stock for 92 1/2, and you can sell
the July 100 call for 8, which would provide a 13.5% return
if the stock is called away.
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The
semis continue to consolidate after breaking out of their
recent trading range. The semis have been one of the
strongest groups in the tech sector, adding to the recent
1,000-point move off the lows in the Nasdaq. Continue to
watch the leaders in the group, including Intel
(
INTC |
Quote |
Chart |
News |
PowerRating),
Rambus
(
RMBS |
Quote |
Chart |
News |
PowerRating), and Micron
(
MU |
Quote |
Chart |
News |
PowerRating).
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Best
of luck with your trading on Thursday!
P.S. Reminder:
Protective stops on every trade!