EOT Trade Alert – September 22, 2009

| September 22, 2009

September 22, 2009

Trade Alert:

   Buy TQNT Feb 2010 $7.50 Calls at $1.45 or better (TQNBU)

Company Background:

TriQuint Semiconductor (TQNT) supplies high performance components to the leading communications companies.  Their parts are used in wired and wireless devices. They’re a leader in 3rd generation mobile networking.

Short-Term Catalyst:

The world of technology is all about innovation.  When a new technology is embraced, it can generate huge amounts of revenue.

Right now the trend driving the market is mobility.  Consumers and businesses alike are ‘unplugging’ from traditional wired networks.  They’re moving to wireless internet access.

It’s all about convenience.  And the ability to have an internet connection anywhere you want is convenient.  More importantly, customers are willing to pay for it.

Up to this point, factors like connection speed and security have limited a full-fledged shift to wireless.  Now, 3G wireless technology is fixing these problems.  More and more people will make the switch to wireless from wired broadband as the technology improves.

That’s where TriQuint comes in.

They’ve spent the last few years focusing on 3G technology.  Their components support high speed data transmission essential to the success of wireless internet. These components are found in mobile devices as well as base stations (the backbone of wireless networks).

As more people switch to wireless internet, the existing network will need to be expanded to handle the increased amount of data.  And customers will need new equipment to access the wireless network.  That can only mean good things for TriQuint.

I’m expecting a good third quarter.  And more importantly, a positive outlook for the rest of the year and 2010.  They’ll announce Q3 earnings in mid-October.

The technical picture is also shaping up nicely.  The stock’s riding support of the 20- day moving average higher since March.  Over the last few weeks, the stock has pulled back to this support level.  The stock has bounced off the support four times during the current rally.  I’m expecting it to do it again.

Trade Details:

Option Ticker Symbol: TQNBU
Underlying Stock Symbol: TQNT
Current Bid-Ask Price: $1.20 – $1.30
Option “Buy Up To” Price: $1.45
Break-Even On Stock At Expiration: $8.95
Maximum Risk Per Contract: $145

Exit Strategy:

TQNT is trading at $7.68 per share.  Resistance levels will be at $9.00 and again at $11.00.  Remember, we want this stock to move higher.  Support levels will be at $6.75 and $6.  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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