Options Trade: American Superconductor Rising Under the Radar

While all the fanfare and buzz surrounding semiconductor stocks has the market's attention, names like American Superconductor (AMSC) are quietly rising up without much notice.

Market interest has been on names like (NVDA) , (INTC) , (AVGO) and others, but this "little" AMSC is starting to get some attention. There's no question that this stock has room to move higher.

The chart is constructive, with a series of higher highs, higher lows since the tested low was established in early March. That would be a textbook re-test, and from the lows in early February, that is bullish. A recent move above the 200-day moving average also is bullish, relative strength is overbought (but not a signal to sell), while the MACD remains on a buy signal.

There's nothing wrong with the chart, and the options are also reflecting optimism. Open interest and recent volume has been heavy in the June period, with the best volume coming in at the 50 and 55 strike. With the stock right in the middle of those two strikes (as of May 1, AMSC was 52.51) a call play out to June is probably a good bet.

I would be looking to add some June 55 calls, a modest speculative play but showing some interest by traders. At $7.30, this call would be profitable with about a 10% move up.

The stock has rallied about 50% over the last five weeks. If the market continues to move higher we should see AMSC reach the old highs around $70 pretty quickly.

At the time of publication, Lang owned a call in May and July AMSC.