AMD Options Trade – Long Calls

AMD Long Calls Swing Trade

In my first trade from the $1,000 to $10,000 challenge I’m looking to enter some long calls on AMD. Specifically the 17 NOV 24 11C on the lowest bottom I can find on Friday.

Update

On great news the stock rallied on Monday. We hit our price target and got out of these contracts at 92 cents each, a 102% return on investment (after fees).

Thesis

AMD has bottomed out after it’s tank from bad earnings. Stochastic oversold, RSI looking to rebound. The point at which it stopped it’s downward spiral is confirmation that the lower trend line created by January and May lows will be respected. There’s no strong overhead resistance until $11.75, so we are going to riding this bounce, dead cat or not. This seems very similar to it’s may low, as indicated by the arrows on the chart analysis.

Trade Risk

I like this trade because it’s pretty cut and dry in terms of deciding when the thesis is broken and it’s time to exit stage left. I’ll be bailing if the stock price goes below 10.45 which is 1.5% below the trend line. At overhead resistance stock price of $11.75, we run the risk of a minor consolidation pattern and premium decay, so we’ll let it run up and give it a chance to run through, but more than likely this is where profit will be taken.

NVDA reports on 11/9. This is going to for sure have an effect on AMD, but follow recent trends I’m thinking it might pop, fade, end near flat or close enough to it.

Portfolio Risk

Per my rules outlined in my growth plan, I can only allocate $250 to this trade. After some analysis of the risk profile, the 17 NOV 24 11C looks to be the best value in terms of price, rate of decay, and sensitivity to price action. Of course, the 10.5C has a better risk profile, but the price is too high considering there’s only a slight risk reduction. The following photos are the differences between the two contracts, and it includes the maximum contract size I’d be looking to enter for each.

Let me know if you’re trading this with me!

AMD 17 NOV 24 10.5C

AMD 17 NOV_25_11C

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