As I was using my Power Stocks scanning program to take a look at the market, semiconductor stocks caught my attention. Several names in this area had all of the qualities I look for in a call option—the potential for a big move up (volatility) based on technicals and past activity in the stock, and good liquidity. All of these are names you’ll recognize, and for good reason—options which do not have liquidity may trap you into a position, or prevent you from taking a large enough position to make the transaction worthwhile.
I’ll leave it up to you to decide which strike price and month are appropriate for your trading style, but be sure to give yourself enough time to be right. I’ve also included the support and volatility levels my scanner has detected for these stocks. An average volatility is considered to be 20.
- Applied Materials (AMAT) shows a reestablished buy pattern in which the stock has confirmed its upward trend after a temporary pullback. The uptrend has started, with the stock about a dollar above its $14 support level. With volatility rated 29, AMAT could see some quick moves.
- Xlinx (XLN) has a lower-than-average volatility rating at 19, and it closed Friday at $40.65, about $2 above its $38 support.
- Cypress Semiconductors (CY) is showing a high volatility rating at 33. It’s sitting right at support around $11, meaning this is likely a good time for a buy or call option before the rally.
- Avnet (AVT) is another one with bullish prospects that’s looking undervalued, sitting right at its $34 support. Volatility is average, rated 24.
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