Microchip Technology Stock Could Enjoy Tailwinds

Microchip Technology stock has found support atop its 40-day moving average

Jun 20, 2017 at 10:02 AM
facebook twitter linkedin


Shares of Microchip Technology Inc. (NASDAQ:MCHP) certainly haven't missed out on the broader rally in semiconductor stocks over the past year. In fact, MCHP sports a year-over-year lead of 56%, including a nearly 27% gain in 2017. While the stock has pulled back from its record highs during the recent tech-sector retreat, it's found solid support from its 40-day moving average.

mchp chart june 16

Microchip Technology's upside potential looks even better when you consider a large batch of June 85 calls just expired. Other options data adds to MCHP's bullish prospects, as well. For example, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.65 ranks in the high 82nd annual percentile. This suggests short-term options traders have been more attracted to puts than normal, and a regression to the norm could result in tailwinds for the shares.

It's also a good time to target near-term options on Microchip Technology. This is according to the stock's Schaeffer's Volatility Index (SVI) of 23%, which happens to land in the low 23rd annual percentile. This indicates low volatility expectations are price into short-term options. Additionally, our recommended call option has a leverage ratio of 6.7, and will double in value on a 14.2% gain in the underlying shares.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this MCHP commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Master Portfolio Trial
 


 


 
Special Offers from Schaeffer's Trading Partners