A way to get long an AI play while keeping a margin of safety in case there’s more volatility

As artificial intelligence continues to revolutionize the technology landscape, semiconductor manufacturing remains at the forefront of this revolution. Lam Research (LRCX) , one of the world’s largest semiconductor wafer fabrication equipment manufacturers, is positioned to benefit from the increasing demand for computing. Lam Research holds the leading market share in etch and is the second-largest player in deposition, making it an indispensable supplier to the world’s top semiconductor companies. Its customer base includes industry giants such as TSMC, Samsung, Intel, and Micron, all of whom rely on LRCX’s technology to produce next-generation chips. As we examine the chart of LRCX, it has recently broken out above a key trading range between $70 and $80 while it outperformed the S & P 500. This strong momentum suggests that there is institutional accumulation as it breaks out from this bottoming formation. This provides a favorable risk to reward entry point for investors looking to gain exposure to the AI revolution through the semiconductor industry. If we look at the business, LRCX trades in line with the semiconductor industry’s median valuation while offering superior growth expectations and profitability. The company trades at 21x forward earnings, slightly below the industry median of 23x, yet its expected revenue growth of 11% and net margins of 27% significantly outpace the industry’s medians of 9% and 21%, respectively. With strong relationships across the semiconductor supply chain and increasing exposure to memory chipmakers for DRAM and NAND, LRCX is poised to benefit from the growing compute and memory demands of AI-driven applications. The trade To take a bullish yet neutral stance on LRCX while allowing for potential ownership at a discount, we are utilizing a cash-secured put strategy. Selling the March $78 put @ $3.47 Credit allows investors to generate income from the premium received while potentially acquiring shares at a net effective price of $74.53 if assigned. The total risk is limited to the $7,453 per contract and provides an effective discount of 4.66% on the stock acquisition if LRCX is below $78 at expiration and the puts are assigned to you. Otherwise, you keep the $347 of income per contract if LRXC is above $78 at expiration and you have the option to sell another put to generate further income and potentially acquire the shares again. (View the trade on OptionsPlay here .) This approach offers a strategic way to gain exposure to one of the most critical players in semiconductor manufacturing while ensuring a margin of safety in case of short-term volatility. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.