Trade Alert: It’s Time to Sell Our XLNX Calls

Ian Dyer & Paul Mampilly Headshots

Today, Paul and I recommend selling our calls on Xilinx Inc. (Nasdaq: XLNX), as the options rallied about 300% today after a good earnings report.

Overall, these options are still down around 15%, but we see this as an opportunity to cut our losses after what’s been a brutal month for semiconductor stocks.

While Paul and I believe that this drop is just temporary, these options expire in December, and we don’t want to risk losing more in this position after such a big bounce.

As we’ve seen in the past few weeks, these sell-offs can happen very quickly. And when fear has a grip on the market, it can drive growing stocks like Xilinx down far below their reasonable value.

Also, after a huge rally like this, stocks tend to retrace a bit back down, which would hurt the value of these options. We’re going to sell these calls before that happens.

Here is your action to take:

Action to Take

SELL ACTION TO TAKE

Stock:

Xilinx Inc. (Nasdaq: XLNX)

Option Type:

Call Option

Action:

Sell to Close

Limit Order:

Limit Order

Duration:

GTC (Good ‘Til Canceled)

Moneyness:

In the Money

At the Money

Out of the Money

Expiration:

December-21-18 or Dec 18

December-21-18 or Dec 18

March-15-19 or Mar 19

Strike Price:

$70

$80

$90

Option Symbol:

XLNX181221C00070000

XLNX181221C00080000

XLNX190315C00090000

Limit Price: (Anything above the limit price is great.)

$10.00

$3.50

$2.20

Trade Deadline:

If I see that no orders have been filled at or above the limit price by my next dispatch, I will update you on the trade.

NoteDo not place a market order. Set the limit order based on your preferred risk level.

Remember, everyone selling these options at once can drive the price down quickly. Based on your own risk tolerance, we would recommend that you sell at or above the prices provided in the alert.

A market order, however, will sell your position immediately at whatever price the market makers want to buy it from you. This may result in a lower return, but it will also guarantee that you sell your position.

We would recommend sticking with a limit order, but it ultimately depends on your risk tolerance.

Right now, we still have two trades in our portfolio on Adobe Inc. (Nasdaq: ADBE)and Teradyne Inc. (NYSE: TER).

We see this move today in tech stocks — especially semiconductor stocks — as an encouraging sign that buyers are beginning to come back into the market after most high-growth stocks have fallen 20% or more in the past month.

So, with almost three months until expiration, we are going to hold on to these stocks for now, and we will notify you immediately when we believe it’s time to sell.

Regards,

   
Ian Dyer & Paul Mampilly
Editors, Rapid Profit Trader