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Trade of the Day: Atmel Corp. (ATML)

This option trade is expected to double in value

   

As I scan the markets with my Power Stocks program, on occasion certain stocks show such positive quantitative signals, either bearish or bullish, that I search through the options chain to find an undervalued put or call to play the move.

This week, Atmel Corp. (ATML) fit the bill. It’s a company with a sizeable intellectual property portfolio that produces microcontrollers and touch-screen components. It’s a powerhouse among the stocks that I follow, with 20% gains year-to-date and a volatile trading pattern that could lead to the kind of big spikes that lead to even bigger percentage moves in options.

Recommendation: Buy ATML July 8 call options at 50 cents or lower. After entry, take profits if the stock price hits $8.80 or the option price reaches $1.00. Exit if the stock price closes below $7.50 or the option price falls to 30 cents.

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