PMC-Sierra Inc (PMCS) is a semiconductor manufacture based in Sunnyvale California. The stock is trading near highs today as big paper is moving into the name. Over the past year, the stock has been making higher highs and higher lows after a tougher winter season selloff. This, as any Ichimoku chartist would say, is indicative of a coming rally. Looking at the daily chart we can see that the stock just broke through long-term resistance to the upside and seems to be setting up for a trend reversal, which we can see from the forward looking cloud. Intraday, PMCS is trading well above the cloud on the five-minute bar. Look for the stock to gain some more momentum, as paper is aggressively long today buying over thirteen thousand (13,000) calls against menial open interest. Based on all this, we can expect PMCS to find new support around its 52-week high of $7.85 and improve on its already impressive 20%+ return. Let’s take a look at the trade:
Trade:
Buy November 9 calls for $0.25
Risk: $25 per lot
Reward: Unlimited
Breakeven on expiration: $9.25
Greeks:
Delta: Long
Gamma: Long
Theta: Short
Vega: Long