BY MARK SEBASTIAN
April 6, 2024
Each week, my team will give an overview of a stock. I’ll discuss fundamentals, Licia will analyze the charts, and AG will break down the volatility.
Have a stock YOU want us to review? Email my team here. – Mark
Hey Trader,
The folks at Dell have been asked to Keynote at an upcoming conference for NVDA. the stock responded by moving straight up…should you hop on…let’s analyze.
Dell Technologies Inc (Ticker: DELL)
TRADE IDEA
Dell has been around a long time, the company has gone from almost out of business, to profitable, to taken private, to public again. It now boasts a market cap of almost 92 billion dollars….
Things I like, the company makes money, bringing in about 4.37 pers share over the last 12 months. The gross margins aren’t bad, and the company pays a nice dividend.
However I question where the growth to have a PE at 30 is going to come from. My guess is that investors are looking at Dell’s move to help customers get into cloud computing and will likely be involved in assisting customers shift toward AI (if that happens).
What I like about this setup is that Dell will have the know how on getting into cloud and AI, and also be able to provide the hardware solutions…this is one of the issues with IBM selling their hardware business…Customers are lazy, they don’t just want to be told what to do…they want to given the hardware to do it.
My guess is that is where the potential growth comes from.
Dell used to have a big debt problem…that has started to fall
If the company can make the Computer solutions business grow and AI is real…this might be the new IBM.
Dell is probably not a terrible AI play here.
Dell Technologies (Ticker: DELL) has been in an uptrend since March 2023.
After its last earnings report on March 1, 2024 it gapped up over thirty bucks.
After a slight pullback, it is now making new highs:
Resistance comes in at $137.55 and beyond that it has room to run to $145-$150.
Support lies at $129.85 and $122.70.
The weekly chart is looking bullish and geared up to make that next leg higher:
I would watch for a change in trend candle but until then the bulls are in control.
-Licia
What the #ell has gotten into DELL?
A $90 stock is now a $128 stock. I could come up with a few ideas but the main one that comes into focus is AI. Earnings in DELL are not for another month so the spike below in short term IV is partly run up to that number plus the insane ranges the stock has had lately.
The short answer is if traders want to buy 30 day options they have to pay full price. AI is a full price option these days.
IV30 and IV60 on the bottom chart for DELL
See below that all the short term IVs are even higher for DELL. The 10 point spike left traders with a mess as all the option prices exploded. By the time DELL shows up in the THS I expect these vols to be lower.
FULLY BACKWARD IVs in the short term for DELL
My guess is DELL retraces somewhat after the big rally since the stock does not have more news for another month. I would look at iron condors in the short term or vega selling spreads. Looks like Michael Dell did a smart thing taking it private only to go public again and catch the AI wave.
The Option Pit Team…
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Mark Sebastian
Founder & CEO, Option Pit
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