Bet on shares rallying through January.
The January 17th, 2020 $45 call options on Vicor Corporation (VICR) saw over 1,100 contracts trade hands against a prior open interest of just over 100, for a 10-fold rise in volume.
In order for the option to move in-the-money in the next 44 days before expiration, shares of the company will need to rally about $4 per share from their current price near $41, about a 10 percent increase.
Vicor, a manufacturer of modular power systems, has lagged the overall market in the past year, as have many companies in the industrial space, but also trades at a hefty price of 44 times earnings. Since the end of September, however, shares have started to move higher.
Action to take: Shares of the company have traded closer to $50 in the past year, so there’s a potential 20 percent upside in shares before they hit their old 52-week high. While the company is a bit expensive on a valuation basis, a buy now to play out the current uptrend could be good for a solid gain in the next few months.
Speculators may want to get in on the January trade, which goes for about $1.20, or $120 per contract, as a cheaper way to bet on a continued move higher in shares. The option could deliver mid-double-digit gains in the next few weeks, but look to take a profit if shares can’t get near the strike price.
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Hint: It’s not silver, platinum or any other precious metal. It’s not aluminum, nickel, iron ore or lithium, either.
But without it, we couldn’t make airplanes, automobiles, batteries, boats, cosmetics, computers, surgical tools or smartphones.
Yet this metal could soon experience the greatest supply crunch in history … which could launch its price to levels never seen before.