Flashing Bull Signal Could Boost Chip Stock

The equity boasts cheap premium at the moment

Deputy Editor
Jun 28, 2023 at 12:58 PM
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After a seven-day losing streaking, shares of semiconductor concern Advanced Micro Devices, Inc. (NASDAQ:AMD) just pulled back to a historically bullish trendline. This comes as traders worry artificial intelligence (AI) will be impacted by the Biden administration's potential restriction on chip exports out of China. 

According to a study from Schaeffer's Senior Quantitative Analyst Rocky White, seven similar signals occurring in the past three years. One month after these signals, AMD was higher 57% of the time, and averaged a one-month return of 5.5%. Last seen marginally higher at $110.66, a similar move from Advanced Micro Devices stock's current perch would put it at more than $116. 

AMD Chart June 282023

Speculating on Advanced Micro Devices stock's next move with options looks like a prudent play. The stock's Schaeffer's Volatility Index (SVI) of 41% stands higher than just 9% of readings from the last year. This means options traders are pricing in relatively low volatility expectations for the time being. Even better, AMD tends to outperform said volatility expectations, per its Schaeffer's Volatility Scorecard (SVS) tally of 96 out of 100.

 

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