AMD Trade Update + Earnings Play

AMD (Advance Micro Devices) has been an Active Long Trade since this entry posted back on August 10th, just over two months ago. The stock gained over 16% from the entry price to reverse a mere 4 cents shy of the first target, T1 at 2.18, on Sept 11th before moving lower while above the suggested stop of a move below 1.61. This semi-conductor stock has been advancing steadily since Sept 29th and until reaching the 1.96 resistance level just a few days ago.


The stock continues to test that level from below & besides the trade update, I wanted to point out that AMD is scheduled to report earning after the market close tomorrow (Thursday). I also want to reiterate that I still believe the charts look very constructive. I share this as some swing traders prefer to close their position before a quarterly earnings report as to avoid getting caught on the wrong side of a gap, should the street not like the results or the forward guidance provided by the company. Based on my read of the charts, my best guess is that AMD is going to make a sizable gap one way or the other and as the technical posture of the charts (i.e.- bullish or bearish) more often than not determine the direction of the gap, I favor an upside move in the stock following the earnings release.

For options traders or those looking for a highly speculative but decent R/R earnings play, the October 1.50 calls have been trading at or only a penny or two above their intrinsic value today. Although I was already long a modest position of AMD since the trade was first posted (which I plan to hold thru earnings tomorrow), I bought a small amount of the Oct 1.50 calls at 0.46 today for speculative earnings trade. The idea being that I put only a fraction of what I might normally lose on a typical position (stock or ETF) if stopped out so my downside risk (net in $) is less than a normal trade (plus I can sell them on Friday for at least something if the stock closes above 1.50) while I wouldn't be surprised to see AMD hit or exceed either T1 or T2 on Friday, should the AMD beat expectations or provide positive guidance. If so AMD reaching T1 or T2 on Friday would equate to a gain of 50%+ or 100%+ respectively. Once again, a VERY speculative trade idea so DYODD & only trade according to your own risk tolerance & trading style.

2015-10-14T15:29:45+00:00 Oct 14, 2015 3:21pm|Categories: Completed Trades - Long, Long-Term Trades- Completed|Tags: |Comments Off on AMD Trade Update + Earnings Play