Advanced Micro Devices Inc. (AMD)
Update 5/8/2017: AMD gapped dramatically to the downside after earnings were published and never returned to profitability. I exited as options expiration neared.
Shares declined by 25.5% over seven days, mostly on the first day of the period, for a -1,330% annual rate. The options position produced a -100.0% loss on debit for a -5,214% annual rate.
AMD publishes earnings on Monday after the closing bell.
I shall use the series of weekly options that trade for the last time 11 days hence, on May 12.
Implied volatility stands at 64%, which is 6.4 times the VIX, a measure of the volatility of the S&P 500 index.
AMD’s IV stands in the 44th percentile of its annual range and the 51st percentile of its most recent broad movement.
The price used for analysis was $13.57.
The premium is 50% of the width of the position’s wings.
The risk/reward ratio is 1.4:1.
Decision for My Account
I have entered a position on AMD as described above. The stock at the time of entry was priced at $13.58.
By Tim Bovee, Portland, Oregon, May 1, 2017