This is the very first stock coverage for 2015 and I strongly believe that 2015 is already shaping out to be a highly profitable year. To start 2015 on a profitable note, we will rake in profits on an options trade into which we entered a little over three months ago.
On September 23 2014, we examined options of Ambarella Inc. (NASDAQ:AMBA) in a post titled “You can’t go wrong with AMBA Calls”. In that post, I gave Ambarella a $46.50 price target after it made a new high to $42. I also recommended buying the AMBA Jan 2015 43.000 call (AMBA150117C00043000) at an asking price of $3.50.
Performance After Three Months
Without making unnecessary repetitions, the shares and options of Ambarella have delivered an impressive performance in the last three months. For instance, the stock has gained an impressive 23.80% from a $42 trading price in September to the current $52 trading price. Interestingly, the stock has made a new 52-week high to $58.00 within the said three months.
On the options front, the Jan 2015 43 call options that I recommended at an asking price of $3.50 have soared by an incredible 190.28% to a $10.16 asking price in today’s session. The option is due to expire on January 17; hence, the smartest cause of action will be to sell the options to close and run with your gains.
New AMBA Coverage
I have new potentially profitable AMBA coverage for you today if you are new to the concept of using the leverage inherent in options trading to maximize trading gains or if you were not able to join the Ambarella party last year.
By the way of an introduction, Ambarella with its market capitalization of $1.53B is a developer of semiconductor processing solutions for video that enable high-definition (HD), video capture, sharing and display. The Company combine its processor design capabilities with its video and image processing, algorithms and software to provide a technology platform. It sells solutions into the camera and infrastructure markets, with approximately 27 million system-on-a-chips (SoCs) shipped since our inception.
Why Ambarella has Been Consistently Hot
Many reasons could be advanced for Ambarella’s ability to consistently deliver incredible gains to traders and investors in the last couple of quarters. Nonetheless, the chief reason behind the consistent gains being recorded in the shares of Ambarella is its vantage position in relation to the stock of GoPro (GPRO).
GoPro is practically exclusively dependent on Ambarella for the semiconductor (chips) that powers its products. For instance, Ambarella’s chips are the driving processing power behind GoPro’s Hero3+ and Hero4. Interestingly, the widely successful nature of these products in the market invariably means that Ambarella is set to record increasing revenue and better margins in the coming quarters.
In addition, shares of Ambarella have started this year on a profitable note as the stock recorded a 0.59% gain as at 2:18PM EST. In contrast, the Dow Jones was down 1.77%, the NASDAQ was down 1.49% and the technology sector was down 1.67%.
How to Trade AMBA Options
I am optimistic about the prospects of Ambarella going forward and I strongly believe that this is best stock with which you can kickstart your options trading activities for 2015. I have a new $60 price target on Ambarella in the next six months and I recommend buying the AMBA May 2015 55.000 call (AMBA150515C00055000) at an asking price of $5.40.
— Daily Option Alerts