I'm subscribed to more than a few EXPENSIVE options picking services as I continue to test my Options Screener vs what will eventually be my competition. Once again those services were snookered into thinking Applied Materials (AMAT) was something special with the huge amount of call options activity seen in recent days. I sure didn't take the bait. A top rule in options is that the crowd is often WRONG, especially heading into earnings. Today over 40,000 May 20 calls traded. While not every trade was a buy, those who bought hoping the stock would run past $21 after earnings, will be holding worthless paper tomorrow morning.
AMAT is down 7% total today (including AH trading) at right around $19. While the company beat the street with posted earnings of 29-cents a share for Q2, the company said revenue would be up or down 2% for its present Q3 as orders fall 10 to 15 percent from the 2nd quarter. (Thud sound effect here). While capex among memory chip makers has been strong, business from contract manufacturers and the makers of flat panel displays has been weaker than anticipated. On the conference call CEO Mike Splinter summed it best: "The situation for 2007 can be summed up as simply: memory is it."