It’s days like these that make me glad that I trade in AMD options, in addition to the core AMD holdings which I have had since 2016 and intend to hold through 2020-22 at the minimum. There is no news on AMD, yet it dropped $0.80 or 3.1%, much more than Intel and Nvidia.
On 3/19/19 as AMD was going up, I sold covered call with expiry on 4/26/19 strike 27, for $1.55 per share. I believe there will be no significant new catalyst to drive AMD share price higher until Q1 ER, or the AMD 50th anniversary on May 1. Of course AMD can always announce a win like the NTT DATA deal, but meanwhile I had already pocketed the premium, making my effective sell price $28.55.
On 3/20/19 I sold cash secured put with expiry on 4/26/19 strike 23.5, for $1.13 per share, I feel that AMD should not drop down below $23.5. Even if it does, either due to short attack or expiration of 90 days lock up period expiring from the Mudabala sale, I think with the imminent release of Ryzen 3rd gen, plus the May 1 AMD 50th anniversary coming up, AMD price should recover quickly. If I get assigned, my cost basis will be $22.37.
So with the wild swings of AMD, as long as it stays within the range of 23.5 to 27, I am happy collecting the options premium, with the time decay on my side. If I get assigned, the outcome is something I can accept, simply because I do believe that AMD will no longer drop down below 20, with Ryzen 3rd gen, Epyc 2, Navi, Microsoft XCloud all coming up, and the $2 B plus quarterly starting in Q3 2019. I do emphasis that I prefer this to day trading, because it is impossible to predict the hour to hour and day to day swings.
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