EOT Trade Alert – July 23, 2009

| July 23, 2009

July 23, 2009

Trade Alert:

   Buy SYNA Aug $37.50 Calls at $1.00 or better (QYGHR)

Company Background:

Synaptics (SYNA) is a self-described developer of “human interface solutions”.  They make these cool touch pads and touch screens you find on PCs, notebooks, and smart phones.

Short-Term Catalyst:

This trade is all about earnings.  SYNA reports on July 30 after close of markets.  I’m expecting them to beat analysts’ estimates handily.

Why do I say this?

Look no further than the chip makers for your answer.  They’re leading the markets higher as demand picks up.

And who’s buying all these chips?  The same companies who use Synaptics’ technology.  If they’re planning on making more notebooks, netbooks, and smart phones, they’re going to need more touch pads and touch screens too.

If that’s not reason enough, they have also beaten estimates the previous three quarters.  Last quarter alone they posted an amazing 28% jump in revenue.

I’m betting they’re going to make it four quarters in a row.

These call options have a short time frame with only 30 days to expiration.  We opted for the shorter time frame and less expensive options because we’re expecting the stock to pop on the earnings announcement a week from today.

Trade Details:

Option Ticker Symbol: QYGHR
Underlying Stock Symbol: SYNA
Current Bid-Ask Price: $0.80 – $0.90
Option “Buy Up To” Price: $1.00
Break-Even On Stock At Expiration: $38.50
Maximum Risk Per Contract: $100

Exit Strategy:

SYNA is trading at $33.95 per share.  Resistance levels will be at $40 and again at $41.50.  Remember, we want this stock to move higher.  Support levels will be at $31 and $27.50.  Conservative investors should look to exit at the first support or resistance level.  Aggressive investors may want to hold for a bigger move.



Category: EOT Trade Alert

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