As I said in the previous alert, semiconductor stocks were hit in the second half of August on concerns about how a potential recession will impact demand from the automotive and industrial end markets in addition to consumer electronics. I believe these fears are overblown.
Like Micron Technology (MU), Applied Materials (AMAT) is significantly undervalued at current levels. I am recommending we roll our put out two weeks to generate more income and give shares a chance to recover.
I am also recommending we roll our Mosaic Company (MOS) put out two weeks to generate more income and reduce our net debit on the position.
You can enter the second leg of the MOS trade even if you were not in the previous one. Just be aware that we will be managing and tracking it based on the ongoing position. However, if you are not currently in the AMAT position, please do not enter it now.
AMAT Sep Week One (9/2) 99 Put
Current Stock Price: $93.08
Cash in Hand: $0.90
- Buy to close the AMAT Sep Week One (9/2) 99 Put for around $5.97
- Sell to open the AMAT Sep Monthly (9/16) 99 Put for around $7.15
- Set your initial credit limit at $1.18, but adjust as needed to roll today
New Cash in Hand: $2.08
MOS Sep Week One (9/2) 52 Put
Current Stock Price: $55.29
Net Debit: $8.96
- Buy to close the MOS Sep Week One (9/2) 52 Put for around $0.19
- Sell to open the MOS Sep Monthly (9/16) 52 Put for around $1.19
- Set your initial credit limit at $1, but adjust as needed to roll today
New Net Debit: $7.96