It’s days like these I am glad that I also trade options in AMD. If AMD share price only goes up in a straight line then buy and hold over several years is definitely the best investing strategy. However, AMD is a high beta stock to the extreme. What with the interest rate inversion, China trade war, Trump’s daily twits, Hong Kong riots, the upcoming recession and the inevitable pending collapse of the civilized world, AMD share price is certain to bounce around like a ping pong ball in an Olympics Gold medal match.
In the days leading up to the Q2 earnings, I had sold calls with strike at 32 and 35. For a long time the calls look certain to be assigned, and I would be missing out on lots of potential gains. Alas, by August 2, price had collapsed and I got to keep all those shares. Same thing after the Rome launch. I had sold more covered calls with strike at 34, expiry August 30. Now it looks like I can buy to close those calls very soon. The premium I had collected are essentially “free money”, or a hedge against AMD going down, when compared to my long “buy and hold” position. Selling cash secured puts is the same idea, except that works best as AMD price goes up.
Selling calls and puts are both excellent ways to generate income as AMD price goes up and down like a yo-yo. The waves in the ocean are always there, no matter what. However, if an ocean wave energy converter is placed in the waves, electrical power can be generated. The buy and hold long position does not benefit from volatility, but options premium can be collected because of such fluctuations. AMD options premiums are the highest around, precisely because investors are betting on AMD in either directions, big time. I aim for 50% annual return in my options position.
Needless to say, the only important caveat is that AMD needs to maintain its bull thesis. The biggest risk for such options play is for AMD shares to go down, and stay down. However, the AMD story is looking better and better all the time!
Computerworld: At the AMD Epyc 2 Launch, I saw the future of the PC! Microsoft Virtual PC platform is looking great. This will move high power PCs into the cloud. Thin clients as a concept has been around since the 90’s, but with high speed internet and the arrival of 5G, one can look forward to getting work station performance on an iPad. AMD is uniquely positioned to provide both the CPUs and GPUs for exactly that scenario, where it powers Microsoft Virtual Windows! I am liking the close collaboration between Microsoft and AMD, mentioned at Computex 2019.
Bloomberg: Intel’s Punching Bag Finally Has a Chance to Compete.
HPCWire: AMD Launches Epyc Rome, First 7 nm CPU.
AdoredTV.com: AMD Epyc Rome Launches: Redefines Datacenter Performance.
Nextplatform: US Military Buys Three Cray (Epyc Rome) Supercomputers.
Dell is now offering Epyc Rome servers
on its web
shop, available as soon as August 23, 2019! This is significant
because DellEMC has been such an Intel slave. Additionally, such
early availability shows Rome is not a paper launch! Meanwhile, HPE
has and is working closely with AMD. Now that HPE owns Cray we can
only expect such collaboration will reach new height.
According to Koreatimes, Samsung is now mass producing PCIe Gen 4.0 compatible SSD and RAM, specifically to work with AMD Epyc servers. So Samsung is also deepening its ties with AMD in the datacenter space, in addition to the joint project with RDNA!