Options Trading News

October 10, 2012  Wed 9:53 AM CT

Shares of Advanced Micro Devices have been cut in half in the last three months, but one trader apparently believes that the bloodletting is ending.

optionMONSTER's tracking systems detected the sale of 5,000 October 3 puts for $0.06 at the same second this morning. Open interest in the strike was 3,678 contracts at the start of the session, so this is a new position.

AMD is down 2.92 percent to $3.15 today. The chip maker's shares have plunged since trading above $8 in April, gapping down from the $6 level after its latest earnings report in July, as the global PC market faces increasing pressures.

Today's put seller is betting that AMD will hold above the $3 strike price by expiration at the end of next week. If the stock is below that level, the trader faces the prospect of having to buy shares for an effective price of $2.94 including the credit from the put sale. (See our Education section)
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The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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