Novellus Systems (NASDAQ:NVLS) is a global supplier of semiconductor manufacturing equipment used in the fabrication of integrated circuits. The company is focused on delivering interconnect products and technologies that meet the increasingly complex and demanding needs of semiconductor manufacturers. Their advanced deposition systems use chemical vapor deposition, physical vapor deposition and electrochemical deposition processes to form the interconnects in the device structure.
Stocks in the semiconductor segment were among the best performers during Friday's rally and shares of Novellus rode the wave, climbing to a 6-month high on heavy trading volume. The recently lackluster technology issue surged nearly 8% on news of an upgrade from Credit Suisse First Boston, which said the maker of semiconductor manufacturing tools is in a good position to grow market share in a declining industry. The analyst also noted that NVLS is priced at a significant discount to competitors, thus highlighting the stock as a "bargain" for investors. Our analysis suggests that NVLS has excellent upside potential and extensive technical support near the cost basis in this conservative position.
Sell Put MAR 27.50 NLQ-OY
Current Bid = $0.50 Open Interest = 1700
Potential Profit (5 contracts) = $250
Initial Margin (5 contracts) = $5,165
Return on Investment (max) = 4.5%
Cost Basis in Stock = $27.00
Days to Expiration = 33