MicroChip Technology Inc. (MCHP) is offering a best in breed semi growth play with a dividend yield of 1.5%.
The company’s back- to-back positive earnings gains have pushed volatility higher than most traded stocks. Taut action of high volatility stocks often leads to explosive moves higher. Enter with buy stop above bull flag trigger of $100.25. The breakout suggests a measured move to $120.
Or, for a higher- probability options trade, consider a butterfly—this has a low cost and a high payout. For example, with the stock at 99, consider selling two of the 105 puts and buying one 100 put, and one 110 put. The maximum potential is
the price paid minus the width of the spread. So, for example, with a price of $65, the risk is $65 to make a profit of $435 ($500 – $65 = $435).
Douglas Busch, CMT, trades U.S. equities using technical analysis with an emphasis on Japanese candlesticks. @chartsmarter