The short legs of our VanEck Vectors Semiconductor ETF (SMH) and Target (TGT) LEAP call spreads are on track to expire worthless. We will simply watch them do so.
We recently reconstructed the TGT trade to bring it in line with the current share price. We may need to do something similar with SMH, closing the 2023 call and opening a 2024 LEAP.
After a strong July, the chip sector was hit hard in August on concerns about falling demand. As you know, I take a long-term view of the industry and think these fears are overblown. Therefore, I believe we could see a bounce in the sector.
SMH Jan 2023 (1/20/23) 250/Sep Week One (9/2) 250 Call Spread
Current Stock Price: $213.70
Cost Basis: $46.75
Action: Watch the SMH Sep Week One (9/2) 250 Call expire worthless
TGT Jan 2024 Monthly (1/19/24) 150/Sep Week One (9/2) 180 Call Spread
Current Stock Price: $165.84
Cost Basis: $50.30
Action: Watch the TGT Sep Week One (9/2) 180 Call expire worthless