Applied Materials (AMAT) has rocketed more than 50% off its mid-October low and our AMAT Nov Week Two (11/11) 84 Call is deep in the money with our shares on track to be called away significantly below our cost basis.
This hurts. There’s no getting around that. But it seems investors may be starting to understand just how undervalued chip stocks are.
The company is scheduled to announce earnings next week. Additionally, President Joe Biden is scheduled to meet with Chinese leader Xi Jinping on Monday, which could have implications for the semiconductor sector.
Once we see how the market responds to these events, we will put on a new AMAT position. It’s possible we will do a buy-write to benefit from share price appreciation in addition to generating income. If so, the net debit we incur today will be factored into our cost basis.
Current Stock Price: $107.78
Cost Basis: $93.68
Action: Allow shares to be called away
Net Debit: $9.68