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October 10, 2012  Wed 9:53 AM CT

AMD: SEE CHART GET CHAIN FIND STRATEGIES
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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So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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