NEW DIRECTIONAL PUT PLAYS
Stratasys Ltd. - SSYS - close: 71.62 change: -1.11
Stop Loss: 74.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.3 million
Entry on January -- at $---.--
Listed on January 20, 2015
Time Frame: 6 to 8 weeks
New Positions: Yes, see below
Why We Like It:
The new 3D printing technology is amazing. Today 3D printing is being used in aerospace, automotive, consumer products, dental, medical, and several more industries. Right now the group seems to be facing challenges with valuations and competition.
According to the company, "Stratasys Ltd. (SSYS), headquartered in Minneapolis, Minnesota and Rehovot, Israel, is a leading global provider of 3D printing and additive manufacturing solutions. The company's patented FDMÂ®, PolyJetâ„¢, and WDMâ„¢ 3D Printing technologies produce prototypes and manufactured goods directly from 3D CAD files or other 3D content. Systems include 3D printers for idea development, prototyping and direct digital manufacturing. Stratasys subsidiaries include MakerBot and Solidscape, and the company operates the digital parts manufacturing service, Stratasys Direct Manufacturing."
The stock delivered huge gains in 2012 and 2013. Unfortunately for investors the stock peaked back in very late 2013-early 2014. Earnings for SSYS have been mixed and the company's most recent report back in November saw management lower guidance.
One of the biggest issues for the handful of 3D companies out there right now is competition. Not only are smaller rivals popping up but technology heavyweight Hewlett-Packard (HPQ) is jumping into the space. In October last year HPQ said their new Multi-Jet Fusion 3D printer can operate 10 times faster than its rivals but it will not be available until 2016. That's a super high-end machine. HPQ is also making a consumer-level product with a $1,900 price target.
Technically shares of SSYS look broken. Wall Street analysts have been lowering price targets on the stock for weeks and SSYS has slipped below all of them. The Point & Figure chart is bearish and forecasting a $63 target.
The oversold bounce from $70 already appears to be failing with today's display of relative weakness (-1.5%). Tonight we are suggesting a trigger to buy puts at $71.40. Please note I do consider this a more aggressive trade because the 3D printing stocks can be volatile. The most recent data listed short interest at 22% of the relatively small 47.4 million share float.
Consider using small positions to limit risk.
Trigger @ $71.40 *consider small positions*
- Suggested Positions -
Buy the MAR $65 PUT (SSYS150320P65) current ask $3.10
Option Format: symbol-year-month-day-call-strike