A big company called ARM Holdings makes special computer chips that are used in many devices like phones and cars. Some people who know a lot about this stuff think that these chips will be worth more money soon, so they buy something called options. Options are like bets on how much the chips will be worth in the future. They can make a lot of money if their guess is right but lose some if it's wrong. Some smart people who study this stuff think that ARM Holdings' options are a good idea, and they want other people to know about it too. Read from source...
- The article does not provide any clear definition or explanation of what options are and how they work. It assumes the reader already knows this basic information and jumps right into discussing ARM Holdings' options. This is a major oversight, as many potential readers may be unfamiliar with options trading and could benefit from a brief introduction.
- The article makes a sweeping generalization that "smart money" is betting big in ARM options, without providing any evidence or data to support this claim. Who is considered "smart money"? What criteria are used to determine their investment strategies? How does the author know what they are doing with their money? These questions are left unanswered, making the article's premise vague and unconvincing.
- The article relies heavily on a single analyst from Rosenblatt who maintains a Buy rating for ARM Holdings and targets a price of $110. While this may be useful information for some readers, it does not justify the claim that "smart money" is betting big in ARM options. One analyst's opinion does not necessarily reflect the overall market sentiment or the actions of other sophisticated investors.
- The article mentions that options are a riskier asset compared to trading the stock, but it does not explore this idea further or provide any examples of how this risk is mitigated or managed. It also does not explain why some investors may choose to use options rather than stocks, or what advantages options offer over stocks in certain situations.
- The article ends with a blatant advertisement for Benzinga Pro, which seems out of place and disingenuous. While it may be relevant information for some readers who are interested in options trading, it does not contribute to the quality or credibility of the article's content. It also creates a potential conflict of interest, as the author may benefit financially from promoting Benzinga Pro.
- The article lacks any personal story or anecdote that would make it more engaging or relatable for readers. It is a dry and factual report of various data points and expert opinions, without any emotional connection or human interest. This makes the article less appealing and memorable for readers who may be looking for something more than just information.
- ARM Holdings is a leading semiconductor company that designs and licenses microprocessor and digital signal processing cores, as well as related intellectual property.
- Smart money is betting big on ARM options, indicating a potential upside for the stock in the near future.
- The analyst from Rosenblatt maintains a Buy rating for ARM Holdings, targeting a price of $110 per share. This implies an approximately 23% upside from the current market price of around $90 per share.
- Options traders can benefit from this trend by buying call options on ARM Holdings with a strike price close to or above the current market price, and a expiration date in the near future. For example, they could buy the December 17, 2021 $95 call option, which is currently trading at around $4.5 per contract, with a breakeven price of $99.5 per share, or about 11% above the current market price. This option would expire in about three months, giving options traders enough time to benefit from the expected price increase, while also limiting their downside risk.
- However, options trading is a high-risk activity that involves significant exposure to leverage and volatility. Options traders should only use a small portion of their portfolio for this strategy, and monitor their positions closely. They should also be aware of the risks involved in options trading, such as the possibility of unlimited losses, the need to meet margin requirements, and the impact of time decay on the value of the options. Options traders should also consider other factors that may affect the stock price, such as earnings, dividends, news, and technical indicators.