Put Down Your Semiconductor Stocks

by Ken Trester | September 28, 2012 9:04 am

Semiconductor stocks just can’t catch a break.

I recently shared that my scans unveiled some short-side opportunities in the semiconductor space, with a notable options opportunity in Lam Research (NASDAQ:LRCX[1]). This week, another LRCX play hit my screens.

If you’ll recall, my initial recommendation[2] was in the LRCX Dec 30 Puts. This time around, my analysis revealed there’s some nearer-term trading setting up.

Buy the LRCX Nov 30 Puts at 80 cents or lower.

You know I like to have a plan before taking any trade. After entry, take profits if the stock price hits $28.90, or if the option climbs to $2.10. Cut your losses and exit the trade if the stock price closes above $33.30, or the option price trades through 50 cents.

It’s not unusual for my scans to reveal more than one opportunity in the same name, but just be sure you’re not over-allocating in any one trade — especially if your portfolio is overly biased to one side. But there’s no denying that LRCX is in some “bad” company.

Applied Materials (NASDAQ:AMAT[3]), Texas Instruments (NASDAQ:TXN[4]) and QLogic (NASDAQ:QLGC[5]) got pinned as problem stocks in my latest results.

Cypress Semiconductor (NASDAQ:CY[6]) and Xilinx (NASDAQ:XLNX[7]) are on my sell watch list.

NVIDIA (NASDAQ:NVDA[8]), Intel (NASDAQ:INTC[9]), Advanced Micro Devices (NYSE:AMD[10]) and Avnet (NYSE:AVT[11]) round out the list as among the weakest in the short-term.

It appears the low-hanging fruit is in the semis, and they are starting to rot — pick some puts to take advantage of it.

Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973.

Endnotes:
  1. LRCX: http://studio-5.financialcontent.com/investplace/quote?Symbol=LRCX
  2. my initial recommendation: http://investorplace.com/2012/09/tough-times-for-chips/
  3. AMAT: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMAT
  4. TXN: http://studio-5.financialcontent.com/investplace/quote?Symbol=TXN
  5. QLGC: http://studio-5.financialcontent.com/investplace/quote?Symbol=QLGC
  6. CY: http://studio-5.financialcontent.com/investplace/quote?Symbol=CY
  7. XLNX: http://studio-5.financialcontent.com/investplace/quote?Symbol=XLNX
  8. NVDA: http://studio-5.financialcontent.com/investplace/quote?Symbol=NVDA
  9. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  10. AMD: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMD
  11. AVT: http://studio-5.financialcontent.com/investplace/quote?Symbol=AVT

Source URL: http://investorplace.com/2012/09/put-down-your-semiconductor-stocks/
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