ADE Corporation (NASDAQ:ADEX) is engaged in the design, manufacture, marketing and service of production metrology and inspection systems for the semiconductor wafer, semiconductor device, magnetic data storage and optics manufacturing industries. The company is also engaged in automated measurement, defect detection and handling equipment with applications in the production of semiconductor wafers, integrated circuits, magnetic data storage and optics industries. ADE's products have evolved from single-instruments used in offline engineering analysis to full, 100% in-line, automated metrology solutions throughout the wafer, semiconductor device and magnetic data storage manufacturing processes. These systems are targeted to deliver the high-throughput, reliability, information and analysis necessary to meet the demands of increasingly complex and time-sensitive manufacturing processes.
Shares of ADEX soared last week amid a rally in chip-related companies. Rumors of a possible deal with KLA-Tencor (NASDAQ:KLAC) also bolstered its share value after the the largest supplier of semiconductor inspection and measurement products offered $205 million for August Technology, a chip-making tool firm. Apparently, KLAC is concerned that smaller rivals, when combined, might pose a competitive threat and they are using a sizable cash stockpile to reduce that danger while expanding their growth potential in the form of new market opportunities.
Whether or not the semiconductor-equipment bellwether has considered ADEX as a merger target remains to be seen, however investors are aware of the "buyout buzz" and the speculation has likely played a part in the stock's recent upside activity. Traders who believe the bullish trend will continue in the near-term should consider this position.
Sell Put MAR 17.50 QDE-OW
Current Bid = $0.35 Open Interest = 2550
Potential Profit (5 contracts) = $175
Initial Margin (5 contracts) = $2,805
Return on Investment (max) = 5.8%
Cost Basis in Stock = $17.15
Days to Expiration = 33