However, some traders are bullish on the near-term outlook for chip stocks and ETFs, SMH in particular.
On Wednesday, “someone bet nearly $1 million on a 7 percent surge in Applied Materials in the next 50 days. In the specific wager, the trader bought more than 25,000 of the July 25 calls for 31 cents each. Since each option accounts for 100 shares of stock, this is a $775,000 bet that Applied Materials will surge above $25.30 by July,” reports CNBC.
ETF investors who are wary of continued weakness in the semiconductor space can turn to inverse or short semiconductor ETF options to hedge against a dip.
For instance, the ProShares UltraShort Semiconductors (NYSEArca: SSG) takes the -2x or -200% daily performance of the Dow Jones U.S. Semiconductors Index and the Direxion Daily Semiconductors Bear 3x Shares (NYSEArca: SOXS) provides a -3x or -300% performance of the PHLX Semiconductor Select Index.
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VanEck Vectors Semiconductor ETF