Filed under: Major movement , Analyst upgrades and downgrades , Bad news , Industry , Applied Materials (AMAT) , Options , Technical Analysis Applied Materials (NASDAQ: AMAT ) shares are falling today after an analyst at Citi downgraded the stock to "Hold" from "Buy" and cut their price target on the stock to $20 from $25, citing a decline in semiconductor orders from chip-makers. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AMAT. After hitting a one-year high of $23.00 in August, the stock hit a one-year low of $16.13 in January. This morning, AMAT opened at $17.32. So far today the stock has hit a low of $17.25 and a high of $18.06. As of 12:25, AMAT is trading at $17.654, down 70 cents (-3.8%). The chart for AMAT looks bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating. For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $22 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.1% return in three months as long as AMAT is below $22 at October expiration. AMAT would have to rise by more than 24% before we would start to lose money. Learn more about this type of trade ...
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Filed under: Major movement , Analyst upgrades and downgrades , Bad news , Industry , Applied Materials (AMAT) , Options , Technical Analysis Applied Materials (NASDAQ: AMAT ) shares are falling today after an analyst at Citi downgraded the stock to "Hold" from "Buy" and cut their price target on the stock to $20 from $25, citing a decline in semiconductor orders from chip-makers. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AMAT. After hitting a one-year high of $23.00 in August, the stock hit a one-year low of $16.13 in January. This morning, AMAT opened at $17.32. So far today the stock has hit a low of $17.25 and a high of $18.06. As of 12:25, AMAT is trading at $17.654, down 70 cents (-3.8%). The chart for AMAT looks bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating. For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $22 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.1% return in three months as long as AMAT is below $22 at October expiration. AMAT would have to rise by more than 24% before we would start to lose money. Learn more about this type of trade ...