New Options for AMD Provide Investment Opportunities

Exploring Put and Call Contracts for February 14th Expiration

Investors in Advanced Micro Devices Inc (Symbol: AMD) have new options available today, set to expire on February 14th. Stock Options Channel has identified a notable put and call contract that may interest potential investors.

For the put contract at the $120.00 strike price, the current bid stands at $6.85. If an investor chooses to sell-to-open this put, they agree to buy the stock at $120.00 while collecting the premium, thus reducing the effective share cost to $113.15 (excluding commissions). For those looking to buy AMD shares, this option offers a more favorable alternative to the current market price of $121.47 per share.

It’s worth noting that the $120.00 strike price is about a 1% discount from AMD’s current trading price, indicating it is slightly out-of-the-money. The data also suggests there is a 58% chance that the put contract may expire worthless. Stock Options Channel will continuously monitor these odds and provide updates on their website. If the contract does expire worthless, the investor would enjoy a 5.71% return on their cash commitment, equating to an annualized yield of 48.45%, referred to as YieldBoost.

The following chart illustrates AMD’s trailing twelve-month trading history, with the $120.00 strike price highlighted in green:

Switching focus to the calls side, a call contract at the $130.00 strike price has a current bid of $4.90. If an investor buys AMD stock at the current price of $121.47 per share and sells this call as a “covered call,” they commit to sell the shares at $130.00. If the stock is called away by February 14th, this setup could yield a total return of 11.06% (excluding potential dividends and commissions). Investors should, however, weigh the potential upside against the risk of missing out on greater gains if AMD shares appreciate significantly.

The chart below shows AMD’s trailing twelve-month trading history, with the $130.00 strike highlighted in red:

The $130.00 strike is approximately a 7% premium over the current trading price, indicating it is also out-of-the-money. There’s a 61% chance the covered call contract may expire worthless, allowing the investor to retain both their shares and the premium received. Should this happen, it would provide an additional 4.03% return, representing an annualized boost of 34.24%, also labeled as YieldBoost.

Both the implied volatility for the put and call contracts is around 49%. Conversely, AMD’s actual trailing twelve-month volatility, based on the 251 past trading days and current price of $121.47, is estimated to be 48%. For further ideas on put and call options, 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.