Bull & Bear: Linear Technology (LLTC)

Shares of Linear Technology Corporation LLTC have been on a wild ride over the past few weeks, dropping precipitously and rallying strongly. This begs the question, “Where are shares headed next?” Bulls: Bulls will note that shares held the $31.50 breakout level during the recent price decline. In fact, shares have rallied back so strongly that you have to wonder if they can make a clean break above the 50-day moving average, just as many other charts have done over the past week. Bulls will also note that the 200-day moving average is still upsloping. The healthy and well-capitalized 2.85% dividend is nothing to sneeze at either and should provide some support. A bullish trader could consider buying August $34 call for $1.85 and selling the August $37/30 strangle for a net credit of $1.75. The total net debit of $0.10 gives you cheap, highly-leveraged upside, while taking advantage of recent volatility by getting short premium. Bears: Bears will note that Linear Technology Corp's major 3-month consolidation pattern (Dec-Feb) resulted in a downside move, which means that those who want to get long the name already have. This means a slow drip lower and a newly established technical downtrend. Bears will also note that, if bulls were present in the majority, then shares would have held the $33.30 support level—a price that shares are struggling to regain and hold at the moment. Bears will also note that down-trending 20-day and 50-dauy moving averages. A bearish trader could consider buying the August $34/32/29 put tree for a net debit of $0.25. This gives cheap, highly leveraged downside to the trader with loses not accrued until Linear Technology trades south of $28.00, or -17%. Linear Technology Corporation designs, manufactures and markets a broad line of standard high performance linear integrated circuits. Its products include high performance amplifiers, comparators, voltage references, monolithic filters, linear regulators, direct current to direct current (DC-DC) converters, battery chargers, data converters, communications interface circuits, radio frequency (RF) signal conditioning circuits, uModule products, and many other analog functions. Applications for its circuits include telecommunications, cellular telephones, networking products, such as optical switches; tablet, notebook and desktop computers; computer peripherals, video/multimedia, industrial instrumentation, security monitoring devices, consumer products, such as digital cameras and global positioning systems, complex medical devices, automotive electronics, factory automation, process control, military, space and other environment systems.