DailyPlay – Opening Trade (AMD) – July 31, 2023

AMD Bearish Opening Trade Signal

View AMD Trade

Strategy Details

Strategy: Long Put

Direction: Bearish

Details: Buy to Open 5 Contracts Aug 25th $110 Puts @ $4.85 Debit per contract.

Total Risk: This trade has a max risk of $2,425 (5 Contracts x $485) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $485 to select the # shares for your portfolio.

Trend Continuation Signal: This stock has been neutral to bearish and is expected to break downwards. 

1M/6M Trends: Bearish/Neutral

Technical Score: 10/10

OptionsPlay Score: 94

Stop Loss: @ $2.40 Credit (50% loss).

Entering the Trade

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

Please note that these prices are based on Friday’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. 

Investment Rationale

Heading into the biggest week of earnings and AAPL on Thursday we kick off the week with some big tech earnings. One name I have my eye on is AMD. After INTC reported decent earnings last week, it was clear that consumer and server chips demand has remained soft. Any AI-driven optimism pales in comparison to NVDA and will likely result in negligible revenue increases. And if we look at a Chart of AMD, it has held its triangle formation, but its relative strength to its sector remains poor, suggesting a breakdown is more likely with earnings as the catalyst. This morning’s pre-market strength is an opportunity to seek bearish exposure as the risk of a disappointing earnings with weak guidance is elevated. I’m buying an Aug 25 $110 Put @ $4.85 Debit (will be cheaper at the open). With a hypothetical portfolio of $100,000 we recommend risking 2% of it on this trade, which is 5 Contracts for a total risk of $2,425. Set a stop loss on the spread when losses exceed 50% of the premium paid, at about $2.40 Credit.

AMD – Daily