Yesterday, we looked at a Daily Price Chart of Broadcom Inc. noting the stock had been making a series of higher highs and higher lows since late February.
For today’s Trade of the Day we will be looking at a Daily Price chart for Lattice Semiconductor Corp. stock symbol: LSCC.
Before breaking down LSCC’s daily price chart let’s first review which products and services are offered by the company.
Lattice Semiconductor Corporation, together with its subsidiaries, develops and sells semiconductor products in Asia, Europe, and the Americas. The company offers field programmable gate arrays that consist of four product families, including the Certus and ECP, Mach, iCE40, and CrossLink. It also provides video connectivity application specific standard products.
Now, let’s begin to break down the Daily Price chart for LSCC. Below is a Daily Price Chart with the price line displayed by an OHLC bar.
Buy LSCC Stock
The Daily Price chart above shows that LSCC stock has been hitting new 52-Week Highs regularly since mid-March.
Simply put, a stock does not just continually hit a series of new 52-Week Highs unless it is in a very strong bullish trend.
The Hughes Optioneering team looks for stocks that are making a series of 52-Week Highs as this is a good indicator that the stock is in a powerful uptrend.
You see, after a stock makes a series of two or more 52-Week Highs, the stock typically continues its price uptrend and should be purchased.
Our initial price target for LSCC stock is 105.00 per share.
Profit if LSCC Is Down 10.0%
Now, since LSCC is currently making a series of new 52-Week Highs and will likely rally from here, let’s use the Optioneering calculator to look at the potential returns for a LSCC covered call trade. Covered calls are also known as buy writes.
The Buy Write Calculator will calculate the profit/loss potential for a covered call trade based on the price change of the underlying stock/ETF at option expiration in this example from a 10% increase to a 10% decrease in LSCC stock at option expiration.
The goal of this example is to demonstrate the ‘built in’ profit potential for covered calls and the ability of covered calls to profit if the underlying stock is up, down or flat at option expiration. Out of fairness to our paid option service subscribers we don’t list the option strike price used in the profit/loss calculation.
The prices and returns represented below were calculated based on the current stock and option pricing for LSCC on 3/16/2023 before commissions.
Built in Profit Potential
For this covered call, the calculator analysis below reveals the cost or the breakeven price is $7,814.00 (circled). The maximum risk for a covered call is the cost of the covered call.
The analysis reveals that if LSCC is flat at 92.74 at expiration the covered call will realize a $1,460.00 profit and an 18.7% return (circled).
If LSCC increases 2.5% or more at option expiration, the covered call will realize a $1,686.00 profit and a 21.6% return.
And if LCSS decreases 10.0% at option expiration, the covered call will realize a $532.60 profit and a 6.8% return.
Due to option pricing characteristics, this covered call has a ‘built in’ 21.6% profit potential when the trade was identified*.
Covered call trades can result in a higher percentage of winning trades compared to a directional stock trade if you can profit when the underlying stock/ETF is up, down or flat.
A higher percentage of winning trades can give you the discipline needed to become a successful trader.
The Optioneering Team is here to help you identify profit opportunities just like this one.
Interested in accessing the Optioneering Calculators? Join one of Chuck’s Trading Services for unlimited access! The Optioneering Team has option calculators for six different option strategies that allow you to calculate the profit potential for an option trade before you take the trade.
Average Portfolio Return of 116.3%
Below is a screenshot of the current open trade profit opportunities from Chuck’s Weekly Option Alert Trading Service. There are currently $140,335.58 in open trade profit opportunities with an average portfolio return of 116.3% demonstrating the ability of the Optioneering Strategy to deliver substantial returns with no losing portfolios**.
**Open trade profit results represent the open trade profit performance for the portfolio displayed on 3/16/23. Open trade profits may have increased or decreased when trades were closed out. Trading incurs risk and some people lose money trading. Past performance does not necessarily predict future results. Member profits and losses are not tracked. Profit potential is taken from results of signaled trades, not actual member results. Not all members make the trades.
Get Trade Insights Directly From Chuck
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See what he’s trading and when with his exclusive Inner Circle Trading Service where he will send you his hand-picked stock and option trades.
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Wishing You the Best in Investing Success,
Editor, Trade of the Day
Have any questions? Email us at email@example.com
*Trading incurs risk and some people lose money trading.