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Advanced Micro Devices Inc (AMD) launched new options for expiration on November 7th, including a notable put contract at a $157.50 strike price, currently bid at $9.90. Selling this put would commit an investor to buy AMD shares at $157.50, effectively lowering the cost basis to $147.60 per share, while the stock trades at $158.44.
The chances of this put contract expiring worthless are estimated at 56%. Should it expire without value, the premium would yield a 6.29% return on the cash commitment, translating to an annualized yield of 53.30%.
On the calls side, a $160.00 strike price call contract has a current bid of $10.55. Selling this covered call, while holding AMD shares at the current price, could result in a 7.64% return by expiration, with a 48% probability of it expiring worthless, potentially contributing a 6.66% extra return or 56.47% on an annualized basis.
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