, , , , ,

Stock Metrics
  • Current Price: $8.00
  • Industry: Semiconductor
  • Market Cap: 3.4 Billion
  • Average Daily Volume: 7.8 Million
  • Average True Range: $.38
  • Beta: 1.89
  • Short Float: 3.14%
  • Short Ratio: 1.63

Trade Idea

ATML has presented a good risk reward swing short. The company was recently bought out by Dialog Semiconductor for 4.6 billion or the equivalent of $10.42 a share. The stock spiked up almost 20% on this news in the premarket but sold off aggressively during that day. Since that day the stock has been trending lower. There has been tons of litigation coming out against the company. Various groups of investors feel the company sold itself for too cheap and they should have gotten more.

Over the past few weeks ATML has been holding below $8.26, creating an important resistance level. After it spiked up the other day and sold off the stock is holding below the $8.26 resistance level and made a new one below $8.20.  I feel you can short the stock here against $8.20 which would only be a 3% loss, but if the trade works I’m expecting it to retest the $7.80 support level, and if the breaks I don’t see why it couldn’t hit $7 especially with the market being so weak.

Since it’s a short I would recommend buying $8 November calls as a hedge. Shorting comes with unlimited risk in theory so I like to protect myself. If ATML does move higher the stop is at $8.26. My time frame for the trade is 2-3 weeks, but it could make a move sooner than that.

Below you will find charts explaining the technical setup.

ATML15min ATML4hour