Do You See What I See?

Hi Shoppers,

I’m kicking off the week talking about the chip shortage crisis — again.

Sorry, but I think it is very important.

You see, chip manufacturing is a very particular undertaking.

Suppliers can’t just find any old warehouse or factory and start spitting these things out.

The chips are made in special facilities called semiconductor fabrication plants — or fabs

These fabs can cost billions of dollars and take up to two years to build.

The environment where chips are actually created is known as a “clean room” and cannot have any dust particles or vibration …

The temperature and humidity also need to be controlled to reduce static electricity.

A clean room at NASA

Everyone from car and gaming component manufacturers to cryptocurrency blockchain producers are in need of chips …

The end demand for these things is nowhere in sight!

On My Radar

I’m adding the following stocks to my radar, as these companies make pieces of expensive equipment — ranging from $700,000 to $4 million — used in fabs.

– Lam Research (Ticker: LRCX)

– Advantest Corp (Ticker: ATEYY)

– ASML (Ticker: ASML)

– Teradyne (Ticker: TER)

A New Trade Idea

I see a doji in Applied Micro Devices (Ticker: AMD).

I know … I lost money on my last trade idea in AMD.

But, I got out in time to be able to re-enter with a new trade idea.

Remember, you always want to be able to trade again the next day — so stick to your trading plan.

If AMD opens today higher than $78.52, which is Friday’s close, I am going to buy a call vertical spread.

Looking at the options, I would like it to be a nearer term expiration, so that I am not paying any extra premium.

I like the Mar19 79/86 call spread paying $1.90-$1.95.

I am buying the 79 calls with an implied volatility of 42.99 and selling the 86 calls with a 44.69 implied volatility.

Like I said, I will only be executing this spread if AMD is opening and trading higher than Friday’s close.

I will take my losses if the spread trades down to $1.20.

I think this spread has great potential on the upside as AMD just traded $86 on March 2, four trading days ago.

Shoppers, also check out the doji in TER. Follow the same guidelines and there could be a great opportunity there, as well.

Have a great week!

Thanks for Reading … See You Next Tuesday!

Licia Leslie

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