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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Invest Like a Monster - San Antonio: October 9-10

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The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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