Analyzing Put and Call Options for Advanced Micro Devices Inc
Investors diving into the options market for Advanced Micro Devices Inc (AMD) on August 23rd had intriguing choices at hand. Stock Options Channel’s YieldBoost formula scoured through the AMD options chain, singling out a put and call contract that caught attention.
Exploring Put Options
The put contract at the $160.00 strike offered a bid of $7.25. By selling-to-open this contract, investors would commit to buying the stock at $160.00. However, factoring in the premium would lower the cost basis to $152.75. This represented a 2% discount to the current trading price and offered a potential alternative for investors keen on AMD shares as they eyed a cost-saving opportunity.
The $160.00 strike teetered on the edge, with a 61% chance of expiring worthless. The resulting premium would deliver a 4.53% return on the cash invested, showcasing the power of utilizing put options tactically.
Visualizing the historical trading journey of AMD added perspective, demonstrating the position of the $160.00 strike in a chart imbued with green highlights.
Unveiling Call Options
On the calls side, the $175.00 strike call contract boasted a bid of $7.50. Opting for a “covered call” strategy at this strike meant committing to sell shares at $175.00. The potential return, excluding dividends, stood at an enticing 11.76% if the stock got called away at expiration.
Contemplating the chances of the covered call expiring worthless, the analytics revealed a 58% probability. In such an event, investors would retain both their shares and the premium collected. This scenario reinforced the nuanced interplay of risk and reward in options trading.
Delving further, a chart spotlighted AMD’s journey, with the $175.00 strike shining in red. The call stood as a 7% premium to the current stock price, showing the optimistic stance implicit in call option strategies.
The implied volatility for put and call contracts stood at 47% and 50%, respectively. When juxtaposed with the actual twelve-month volatility, measured at 45%, these figures painted a dynamic picture of the market’s sentiment and movement.
For investors seeking more insights into potential options strategies, Stock Options Channel remained a valuable resource, offering a repository of ideas and analyses tailored for the discerning trader.
