Why AMD Presents an Intriguing Play for Options Bulls

Advanced Micro Devices stock has plenty of room to run

Nov 11, 2020 at 12:13 PM
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Semiconductor stalwart Advanced Micro Devices, Inc. (NASDAQ:AMD) is bouncing off its 100-day moving average, which previously served as a springboard to a huge rally back in July. With additional support emerging at the $100 billion market cap level, there is reason to believe AMD has room to run on the charts.

AMD Nov 11

Short interest has fallen off a cliff, down 80% in the last 12 months. Continued short covering could serve as a tailwind for the equity. There also looks to be massive upgrade potential toward the chip stock. This is per the 11 of 25 covering analysts sporting a tepid "hold" or worse recommendation. Plus, the consensus 12-month price target of $87.57 is a slim 2.7% premium from its current perch.

Options are certainly the route, with premium affordably priced in a post-earnings volatility crush. The stock's Schaeffer's Volatility Index (SVI) of 46%, which sits higher than just 11% of all other annual readings. Plus, AMD's Schaeffer's Volatility Scorecard (SVS) ranks at 76 out of 100, meaning the security has tended to exceed these expectations during the past year -- a boon for premium buyers.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this AMD commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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