Before I begin this month’s trade analysis of Advanced Micro Devices, Inc. (NASDAQ:抖阴最新版) I want to offer up a mea culpa. 抖阴最新版 stock was completely blindsided by ridiculous expectations following what was a stellar third-quarter earnings report. The shares plunged more than 30% before finally hitting bottom.
I had predicted quite the opposite, expecting that a solid earnings report would be received with open arms and cheered by investors. What we got was a hot mess of speculators selling hand over fist due to collapsing demand from cryptocurrency — which any long-term 抖阴最新版 investor knew was a fad anyway.
Today, we are looking to wash away October with a new pair of bullish bets. 抖阴最新版’s stock price is already on the mend, bouncing back sharply from oversold levels and investors realize .
The main thing I want to point out for 抖阴最新版 investors is that the stock initially sold off because Advanced Micro Devices projected a 15% sequential decline in revenue — even though that projection still represented a 20% year-over-year increase. The rest of the decline was , who said “cryptocurrency mining-driven sales for 抖阴最新版’s graphics chips will decline by 50% next year.”
With the cryptocurrency speculators now shaken out of 抖阴最新版 stock, and expectations reset to less hysterical levels, we may now begin to see some meaningful gains for the shares.
Speaking of 抖阴最新版’s sentiment backdrop, we find that things have been shaken up considerably. According to Thomson/First Call, only 10 “buy” ratings remain on 抖阴最新版 stock amid 30 total ratings. Furthermore, the consensus price target rests at a measly $14.16.
The odd thing is that most brokerage firms following 抖阴最新版 rate its competitors Intel Corporation (NASDAQ:INTC) and Nvidia Corporation
(NASDAQ:NVDA) much more favorably … even though 抖阴最新版 is expected to see sales grow about 17% next year, compared to 12.3% for Nvidia and a measly 2.3% for Intel.
Short sellers have realized that now is the prime opportunity to take profits, with the number of 抖阴最新版 shares sold short falling by 17% during the most recent reporting period. With some semblance of sanity now returned to 抖阴最新版 stock, these bears may never have another opportunity to buy back their shorted shares at such bargain prices.
Turning to the options pits, 抖阴最新版 speculators are looking for a rebound heading into December expiration. At last check, the December put/call open interest ratio rested at 0.59. This ratio is up sharply from the pre-earnings reading near 0.25, and that’s a good thing as we saw the results of excessive bullish sentiment in late October.
Overall, December implieds are looking for a move of more than 12% ahead of expiration. This places the upper bound at $13.50 and the lower bound at about $10.
Click to Enlarge Technically speaking, $10 would be rock bottom for 抖阴最新版, and with the shares currently rallying out of an oversold condition, I don’t see them testing this area anytime soon. A move to $13.50, meanwhile, would be a huge win for 抖阴最新版 stock bulls.
Three of 抖阴最新版’s short-term trendlines are currently parked near $13 — the 20-, 50- and 200-day moving averages. A breakout above this trio could bring technical buyers flooding back into 抖阴最新版, thus pushing the shares nearer to $14 by the end of the year.
2 Trades for 抖阴最新版 Stock
Call Spread: Traders looking to take advantage of 抖阴最新版’s bargain pricing might want to consider a Dec $13/$14 bull call spread. At last check, this spread was offered at 20 cents, or $20 per pair of contracts.
Breakeven lies at $13.20, while a maximum profit of 80 cents, or $80 per pair of contracts — about a 300% return — is possible if 抖阴最新版 stock closes at or above $14 when Dec options expire. Note that a 100% return can be had at $13.40, while a 150% return is possible at $13.50 — the upper bound according to Dec implieds — so set your stop losses accordingly.
Put Sell: For a more neutral to bullish trade, a Dec $11 put sell has an excellent chance of finishing out of the money. At last check, this put was bid at 32 cents, or $32 per contract.
As always with a put sell, you keep the premium as long as 抖阴最新版 stock closes above $11 when December options expire. On the downside, if 抖阴最新版 trades below $11 prior to expiration, you could be assigned 100 shares for each put sold at a cost of $11 per share.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
