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I think the United States is going to resolve its differences on trade with the European Union, and also Mexico and Canada eventually. The problem, though, is the trade war is still going strong in China, and it doesn’t seem that they want to make a deal.
One casualty of the trade war so far has been the failed attempt by QUALCOMM, Inc. (NASDAQ:QCOM) to acquire NXP Semiconductors NV (NASDAQ:NXPI), as Chinese regulators blocked the acquisition this week due to competition concerns. While they did not explicitly say that the trade tensions were the reason for blocking the deal, it’s widely suspected that this was China’s way of retaliating against the tariffs imposed on it by the United States.
Meanwhile, while Chinese telecom equipment company ZTE (OTCMKTS: ZTCOF) did ultimately come to a deal with the Trump administration that lets it resume buying American technology, the stock sustained some damage, and ZTE also has the aftermath of $1 billion in penalties to contend with.
Its suppliers, like Acacia Communications, Inc. (NASDAQ:ACIA), which had to suspend its agreement with ZTE during the U.S. trade ban, got caught in the crossfire. ACIA has got an earnings report coming up on Aug. 2 after the close, and it’s looking like a good bearish trade now:
Buy to open the ACIA Sep 30 Puts (ACIA180921P00030000) at $1.75 or lower.
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InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.