How I’m using options to play MSCC
Here’s an option to put on your radar. Microsemi Corp.
(
MSCC |
Quote |
Chart |
News |
PowerRating) is one of
the leading companies in the semiconductor manufacturing group. The
company rates highly across the board in terms of both fundamental and technical
measures.
As the chart below shows, the share price has been in a steady
uptrend for some time now and has held up quite well in the face of general
market weakness the last several sessions. That’s a pretty good indication
of underlying strength.
An interesting short to intermediate term play is to buy the March 30 Calls.
If you have the expectation that the market is going to make a decent run higher
in the next few sessions, then buying the calls now could get you in at bargain
prices. A more conservative approach would be to wait for MSCC to break
above the recent highs at about 31.50 and get in to the calls then.
Obviously, that would make for higher premiums.
One could expect to see a 3-5 point move from current levels, especially if
the general market rallies. With premiums on the March 30s running at
about 2 as of this writing, a trader could make 50-100% in perhaps a couple of
weeks.
John Forman is a near 20-year veteran of trading and investing across a wide array of markets and instruments. He is author of the forthcoming book,
The Essentials of Trading (Wiley, April 2006)
and is currently working on a new option trading book –
Trading With Fire. His analysis and market comments have been found in the financial news media across the world and he has published dozens of
magazine articles on trading methodology and analytic technique. To learn more about John’s research and trading activities, visit the
Anduril Analytics website.