AMAT strangle: calls $0.45 to $1.40 puts $0.70 and $0.10 to $0.80 however led to shorting AMAT and the resulting semiconductors and tech shorts Thurs/Friday. We did not have more than a "medium straddle" so we didn't make boatloads nor did we lose boatloads when the tech sector collapsed (not a cent).
We DO NOT encourage out traders to buy on dips for more than a daytrade and don't accumulate and average down losers like ELX, YHOO, AMAT, KLIC, QLGC, not even SNDK (March options are lukewarm to cool). AMAT was a good 'round trip' play like HPQ, WFII etc. The move up didn't last, AMAT was not a longer term buy or even more than a gap up and easily shortable along with the other techs at spike highs. We are biased to short side from first week of November for certain technology stocks like QLGC (last earnings season) new shorts from the first week in January (entire earnings season basically leading off with AMZN) except for a very distinguished amount of undervalued and underpriced plays (see our banner above).
Plenty of earnings plays this month and AMAT just another yawner that was a short the gap up play. Nothing of consequence nothing different from ERES, PLAB, INTU WFII, PNRA all shorts through and gappers 'n crappers the day of the report. Traders need to look at the complete picture and all the cycles of the trade before they get too ebullient, we are pretty much used to the gap up or gap down and crap and AMAT, HPQ etc, were no different than the scores of other successful earnings plays we had in February. As to emails of what I think of the semi sector and techs, we are still biased to 'short the rally' but have a number of plays ACROSS sectors so we don't hang around the semis for more than the 3-cycle earnings play. My newest portfolio has only 10% tech and 60% cash so I'm not rushing to buy techs at these rich valuations and I don't think I'm alone in this analysis.
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