2nd Skies Trading

This Could Be Headed For The Moon

Technology is a major part of our lives. We rely on it to order our favorite meals, keep track of our fitness levels, entertain ourselves, increase work productivity, and so much more. But technology itself relies on little devices called chips such as processors and memories. Some of the most prosperous companies in the last two decades have arisen from this industry. ASML Holding (Nasdaq: ASML) is one of them.

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Source: Pixabay

Based in Germany, ASML produces lithography machines that are used to etch circuits on chips, and they’re currently the largest producers of this service in the world. The customers they have in their books include huge tech kingpins like Intel (Nasdaq: INTC) and Samsung. Besides that, no other company apart from ASML manufactures EUV lithography systems which are used on the smallest chips.

The growth opportunities for ASML are just as massive as the growth potentials of technology. But 5G tech and cloud computing are probably going to be at the forefront in the near future. Self-driving cars, predictive healthcare, and smart homes and cities are heavily brewing in the corner. As far as we can see, ASML will not be short of growth opportunities now or in the future.

A quick glance at the financials of ASML and you can already tell the company is a winner. Despite the COVID-19 pressures of 2020, the company still finished strong. Growth metrics increased, with net income at €3.6 billion (38.5% from FY ’19), net income per share at €8.49 (37.8% from FY ’19), and total net sales at €14 billion (18.6% from FY ’19).

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Source: ASML

Already, the company is up and running this year, recording a year-on-year gross profit increase of 27.6% from FY‘20.

Technical Analysis

The ASML stock looks like it’s on a rocket to the skies. The price looks to have bounced back from the $633.69 – $670.02 support level, but it hasn’t even quite touched it yet. Although there’s no way to tell what exactly it’s trying to do, there’s, however, no doubt that the stock is on a strong bullish run.

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A trendline formed from November, 2020, and it currently holds the price. The price already looks to be bouncing from it, and this could be a sign of a trend continuation.

But if the price breaks the trendline, there’s another trendline that has formed underneath the first trendline. The $633.69 – $670.02 support level also awaits it. So, there are so many opportunities for the price to continue its strong bullish run, and we believe it will continue to do so.

Option Positioning

For such a large cap stock, the option volume isn’t gangster. Currently there are about 23K calls and 43K puts, but I’m guessing many of those puts are $ secured puts, which is actually bullish for the stock.

NOTE: We teach you how to trade the cash secured put strategy in our options bootcamp, along with 7 other option strategies. Click here to get access now.

Based upon current option positioning, the earliest we see support is around $740, and then $655.

FULL DISCLOSURE: Chris Capre currently has no stock or option position in $ASML, but he does have pending orders. If you’d like to learn more about Chris’s trades and positions, you can get access via the Trading Masterclass where he shares his live trades, further investment ideas and daily market analysis.

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