Call Options Or Put Options On GT Advanced Technologies (GTAT)?

| June 11, 2014 | 0 Comments

GT Advanced TechnologiesGT Advanced Technologies (GTAT) has been a hot stock this year. The electronics material and equipment maker is up nearly 90% for the year.

GTAT shares are currently trading for $17.29. The stock’s down 11% from the 52-week high of $19.44 and is an impressive 403% above the previous 52-week low of $3.44.

Is this an opportunity to buy call options on GTAT with Apple’s (AAPL) upcoming new product announcement? Or should you buy put options on GTAT because of the high short interest in the stock?

The bulls make a convincing argument…

GTAT has been a huge winner this year after announcing a big deal with Apple. The company is making sapphire-based materials for an undisclosed Apple product or products.

Sapphire technology is a big deal and could become a major force in electronics materials. Apple will most likely use sapphire for its iPhone case/cover. It will supposedly make the new phone drop-proof.

If GTAT’s sapphire materials will be used in the next generation of iPhones, that should provide a massive boost to the company’s revenues. It could also open up the door to several other opportunities.

But the bears have a compelling case as well…

Most investors have already bought GTAT on the Apple news. The revenue boost could already be built in after the stock’s big jump this year.

Moreover, the shares are trading at nearly 20x projected earnings. Basically, after this year’s climb, GTAT is already looking expensive.

Finally, there’s a large amount of short interest in the stock. The short float on the stock is a very high 32%. That means a lot of investors are betting against the company. Most likely, it’s because of the substantial run-up in the share price this year.

So is Apple’s new product a reason to be bullish on GTAT, or is the high short interest a reason to be wary?

If you think the bulls are right, take a look at buying the GTAT July $17 calls for around $1.50.

If you think the bears are right, take a look at buying the GTAT July $17 puts for around $1.00.

Yours in Profit,

Gordon Lewis

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Category: Call Or Put Options?

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also editor of our dynamic theme-based options trading service, Advanced Options Adviser, and one of the key analysts behind the highly successful Options Trading Wire.