Lam Research Corp (LRCX) Might Be a UFO!
I discovered this fluffy creature and I think it might be a UFO, but more research is necessary.
I picked this one up yesterday, but decided it was still worth writing about today. But before that...
What's the Word on the Street?
It's the day we were all waiting for! The Federal Reserve Chairman gave his speech at the economic symposium in Jackson Hole this morning and...
Federal Reserve Chair Jerome Powell opened the door for the central bank to cut rates as soon as its meeting next month, when he said the prospect of a sharper slowdown in the job market might reduce concerns that cost increases due to tariffs will fuel inflation.
The market, which had been depressed for the past week, suddenly rejoiced. Exactly what they had expected (a September rate cut) a week ago was now heavily hinted at happening when they originally expected it would! Who would have thought such a thing could happen?
Lam Research Corp (LRCX)
What Is It?
Lam Research Corp. engages in the design, manufacture, marketing, refurbishment, and provision of semiconductor processing equipment used in the fabrication of integrated circuits. It operates through the following geographical segments: United States, China, Europe, Japan, Korea, Southeast Asia and Taiwan. The company was founded by David K. Lam in 1980 and is headquartered in Fremont, CA. The listed name for LRCX is Lam Research Corporation Common Stock.
Why Is It a Possible UFO?
Primarily its current share price relative to its fair value and what other option traders expect are the reasons LRCX could be a UFO.
What About Recent News?
LRCX has received boosted price targets from analysts this week. It recently reported a beat for its latest earnings, but management provided cautious guidance for flat revenue next quarter. Despite that, LRCX is a chip stock that was recently under sector pressure, but is in an upswing today alongside the rest of the market.
What's the Current Price?
LRCX has had a great run so far this year, with the bulk of its gains coming from the past 3 months. But at the time I took this screenshot, it was basically flat on the month and down on the week.
What’s the Fair Value?
Analyst fair value ratings for LRCX
I’d first like to emphasize that fair value is subjective. Many analysts at many banks and institutions rate stocks differently and assign fair value in their own unique way. So, what I like to do is take all the recent fair values since the most recent earnings report and average them. In this case…
Since LRCX's most recent earnings report on 07/30/2025, it has received 11 ratings and taking the average, the fair value might be somewhere around: $111.
8 ratings are a Buy, 2 are a Hold, and the Morningstar rating is unknown. The lowest price target is $94, while the highest is $120.
What Do Options Traders Expect?
Calls are trading over equidistant Puts, which means traders think there is a chance to the upside. You can see because… forget about the green columns and focus on the red. Notice how on the right side for the $92 Put it says $2.04, it’s $2.30 for the equidistant Call at $103.
The premium (the credit you receive for executing the trade) is currently less for selling Puts, as opposed to selling Calls. Basically because of that, option traders expect the stock to go up, rather than down.
How About Volatility?
The IV rank (the purple line) for LRCX (stock price in blue) is currently hovering around 6.97, which is very low (IV rank goes from 0-100). This makes short strategies (which are what I prefer) less attractive.
What's the Trade?
My preferred trade is a variation of the wheel without the rolling, AKA cash-secured puts. I typically like to target stocks that offer a dividend and are below fair value.
Why a dividend? If the trade results in assignment and I’m on the hook for X amount of shares, I can at least be satisfied knowing I picked a (hopefully under fair value) company that will pay me a small amount while I run the other side of the trade AKA covered calls.
LRCX does offer a dividend with a yield of 0.93%.
It’s a fairly low-risk strategy (all options trading is risky!), that has a higher probability of success, but requires a higher amount of collateral.
So if you saw the most recent image above, I already STO (sold to open) 1 contract of the $92 Put for the September 26th expiration. I like to have a DTE (Days To Expiration) that is around ~45 days.
When the trade reaches 50% profit I will buy it back. I don’t like to be greedy and go for more profit, because I would rather not waste my time being in a trade for too long.
What About Alternative Trade Ideas?
- If the collateral requirement is too high, another idea is a put credit spread. You would sell a put at a strike below the current share price and then buy a put at a lower strike than the put you sold. By doing so, you will avoid the collateral requirement of a cash-secured put, but the credit received will be smaller. Also, if the trade goes sideways, you will not be assigned shares so no collecting dividends and running covered calls afterwards.
- Just invest! 1 share or even fractional shares are a way to get a foothold in a stock that you think might increase in value.
Completed Trades
Dino Silvestro
BTC with a 50% profit
Wait…Where Are the Candlesticks? And All the Other Indicators?
I know many traders love their candlesticks and a ton of indicators. I prefer simplicity. Candlesticks aren’t necessary unless you’re the kind of trader that wants to try and pick the perfect moment to execute a trade, and even then it’s not a sure thing.
As for indicators, there are a ton. Some of them work sometimes. None are perfect. I don’t want to get bogged down with too many. You’ll drive yourself crazy looking at too many of them, so find a handful you like and stick with those.
Disclosures
- I currently have an open trade with LRCX (as mentioned in this post).
- No trade is a sure thing. There is always risk involved.
- This blog post is not meant to take the place of financial advice, but hopefully acts as a guide for learning or informational purposes.