Chipmaker Lam Research (LRCX) has been in a downtrend since July, and shares are now down over 7% in the past year. One trader sees a rebound in the first half of 2025.
That’s based on the June 2025 $94 calls. With 179 days until expiration, 11,644 contracts traded compared to a prior open interest of 116, for a 56-fold rise in volume on the trade. The buyer of the calls paid $2.65 to make the bullish bet.
Lam Research recently traded for about $71, so shares would need to rise by $23, or about 33%, for the option to move in-the-money. The strike price of the option is close to the stock’s 52-week high of $113.
Operationally, Lam has fared reasonably well. Revenues are up 20% and earnings are up 26% over the past year. Plus, Lam sports a solid 26% profit margin, a relatively high level for a manufacturing business.
And on the valuation side, with shares trading at 20 times earnings, Lam is cheaper than the overall market right now.
Action to take: Shares look like a value here, and the stock looks like it may find support around this level. If that’s the case, a rebound could be in the cards in the first half of 2025. Lam also pays a 1.2% dividend.
For traders, the June 2025 $94 calls are aggressive, but a sharp rebound could mean high-double-digit returns on the trade, which also has plenty of time to play out.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.