Trade Summary: April 25, 2016

| April 25, 2016

April 25, 2016

 

 Trade Rationale

The market has stabilized and we’ve been experiencing neutral to slightly bullish action for the past several days/weeks.  However, technology has been lagging behind the rest of the market somewhat, especially if you remove some of the biggest names from the equation.

I believe we’re going to see some of the mid-tier tech names do better in the coming weeks.  This could happen soon (due to earnings) or it could just be a general tech market rally occurring over a period of time.  Either way, I like the tech sector for the short to medium term investment horizon.

We’re going to buy calls in two tech stocks that could catch a bid.  Conversely, we’ll purchase a put on a potentially expensive tech company.

The first tech company we’ll grab calls in is Skyworks Solutions (SWKS).  SWKS is a semiconductor company, but what it’s known for mostly is being a supplier to Apple (AAPL).  That means it could get a boost from AAPL earnings or its own earnings (coming up this week).

Next, we’ll buy calls in Juniper Networks (JNPR).  JNPR is a networking and communications devices company that also reports earnings this week.  The company has already lowered guidance, and now it looks too cheap. It basically has only one direction to go from here… up.

Finally, we’re going to buy puts on Splunk (SPLK).  The business intelligence software company looks expensive here.  It’s also still posting a negative operating margin.  That’s going to catch up to the share price at some point.  Earnings aren’t until late May.

 

Trade Details

#1) Buy Skyworks Solutions (SWKS) June 17th 77.50 Calls up to $1.95

For this trade, we’re looking for SWKS to climb.  Our first profit point for conservative traders is at $77.  For aggressive traders, you can hold up to $80.  For risk control, the conservative exit level is $64.  $60 is the final exit level for aggressive traders.

swks042516

#2) Buy Juniper Networks (JNPR) June 17th 24 Calls up to $1.25

With this trade, we’re also looking for a move higher.  Our first exit point for conservative traders is at $25.50.  For aggressive traders, you can hold to $27.  For risk control, the conservative exit level is $22.  And, $21 is the final exit level for aggressive traders.

jnpr042516

#3) Buy Splunk (SPLK) June 17th 47.50 Puts up to $2.35

Finally, we’re looking for a move down in SPLK.  Our first profit-taking exit point for conservative traders is at $45.  For aggressive traders, you can hold to $42.  For risk control, the conservative exit level is $55.  $58 is the final exit point for aggressive traders.

Splunk

 

Category: AOA Trade Summary

Comments are closed.