Computer component manufacturer Super Micro Computer (SMCI) was a darling stock in the early part of 2024, only to see shares slide heavily. Now, shares are on the rebound and one trader sees further upside ahead.
That’s based on the April $57 calls. With 55 days until expiration, 27,443 contracts have traded compared to a prior open interest of 701, for a 39-fold rise in volume on the trade. The buyer of the calls paid $16.70 to make the bullish bet.
Super Micro Computer shares recently traded for about $62, making the option already about $5.00 in-the-money. Shares have nearly doubled off of last year’s lows, but are still about 50% off their all-time high of $122.90.
Super Micro Computer shares soared thanks to the AI boom and its hardware components, which are essential to data centers. But some short sellers raised questions about the company’s accounting after shares soared last year.
Today, SMCI trades at about 21 times forward earnings. Revenues have soared 143% in the past year, and earnings are up 82%.
Action to take: SMCI has all the hallmarks of a growth play right now. With shares trending higher, momentum investors may like shares as well.
For traders, the April $57 calls are a bit costly, given that they’re already in-the-money. But they could see mid-double-digit returns. More aggressive investors may want to use an option with a higher strike price.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
