DailyPlay – Opening Trade (AMD) – October 24, 2022

AMD Bullish Opening Trade

View AMD Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 6 Contracts Nov.18 $60/$75 Call Vertical Spreads @ $3.28 Debit.

Total Risk: This trade has a max risk of $1,968 (6 Contracts x $328).

Counter Trend Signal: This is a Bullish trade on a stock that is experiencing a bearish trend. 

1M/6M Trends: Bearish/Bearish

Technical Score: 2/10

OptionsPlay Score: 79

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note these prices are based on the previous day’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

After the Nasdaq-100 completed the Weekly Setup – 9 Count for the 3rd time this year, it adds to the odds of a sustained rally into Election Day and potentially further beyond. One of the industries that have seen the largest declines and multiple contraction has been semiconductors.

The SOXX Semiconductor ETF also printed a Weekly Setup -9 Count last week, providing an opportunity to seek long exposure going into a tech heavy earnings week for semis. For today’s DailyPlay we are going to look at AMD, which also printed a Weekly Setup – 9 Count, targeting the $75 conversion line to the upside.

Trading at 15x next year’s earnings and 11x EV/EBIDTA valuation while expecting 8% EPS growth in 2023 translates to gaining long exposure to this stock at half of the valuation from 2021. With an IV Rank of 74 and earnings in 8 days I’m going to use a short dated Debit Vertical Spread structure to play for potential pop higher on earnings while risking only 5.5% of the stock’s price and a roughly 3.5x reward to risk potential.

Buy to Open 1 AMD Nov 18, 2022 60/75 Call Vertical @ $328.00

AMD – Weekly