New Options Trading for AMD Offers Strategic Opportunities

Investors Eye Potential Gains with February 28th Contracts

Today, investors in Advanced Micro Devices Inc (Symbol: AMD) welcomed new options trading for contracts expiring on February 28th. Stock Options Channel employed the YieldBoost formula to review the AMD options chain, identifying one put and one call contract as particularly noteworthy.

The put contract at the $119.00 strike price currently has a bid of $7.30. If an investor decides to sell-to-open this put contract, they agree to buy the stock at $119.00, while also collecting the premium. This action effectively lowers their cost basis for the shares to $111.70 (excluding broker commissions). For investors eyeing a share purchase of AMD, this could be an attractive alternative to the current trading price of $121.75 per share.

Notably, the $119.00 strike price offers an approximate 2% discount compared to the current stock price, indicating that it is out-of-the-money. Data analysis shows a 59% chance the put contract might expire worthless. Stock Options Channel will monitor these odds and provide updates on our website’s contract detail page. Should the contract expire without being exercised, the premium would yield a 6.13% return on the cash commitment, translating to an annualized return of 43.90%. This measure is what Stock Options Channel designates as YieldBoost.

Below is a chart depicting the trailing twelve-month trading history for Advanced Micro Devices Inc, with the $119.00 strike highlighted in green:

Shifting focus to the call options, the contract at the $123.00 strike price has a current bid of $8.30. If an investor buys shares of AMD stock at the current price of $121.75 and sells a covered call at this strike, they are agreeing to sell the stock at $123.00. Including the premium from the call, this would yield a total return of 7.84% if the stock is called away by the February 28th expiration (before broker commissions). However, significant upside remains possible if AMD shares appreciate, making it essential to analyze the stock’s trading history and business fundamentals. Below is a chart showing AMD’s twelve-month trading history, featuring the $123.00 strike price marked in red:

The $123.00 strike price represents about a 1% premium over the current trading price, meaning it is also out-of-the-money. This raises the possibility that the call contract may expire worthless, allowing the investor to retain both their shares and the premium. Analytical data shows a 48% chance of this outcome. Stock Options Channel will continue tracking these odds, featuring updates on our website, ensuring that trading history for the option contract is also charted. If the covered call expires worthless, the premium would provide an additional return of 6.82%, or an annualized 48.79%, a figure also known as YieldBoost.

For context, the implied volatility of the put contract is noted at 54%, while the call contract has an implied volatility of 52%. We calculated the trailing twelve-month volatility—as derived from the last 251 trading day closing values and today’s price of $121.75—to be 48%. For further put and call options ideas, be sure to visit StockOptionsChannel.com.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.