[Buying Puts on Advanced Micro Devices (AMD)/Buying Apr 25 Puts (AMDPE) on AMD/Day Order/Limit $5.10]
Dear Member,
In spite of some good earnings news last week, Advanced Micro Devices (AMD) has been unable to break through resistance. I am placing an order to buy the Apr 25 Puts for $5.10. These are in the money puts and the time portion of the premium is about $0.96 a share. The delta is currently around .69 (which means that the option price is expected to move about 69 cents for each $1 the stock moves).
For those new to option trading, the cost of the trade would be $5.10 x number of contracts x 100 (the number of shares per contract). The maximum risk is the amount invested. However, I would plan to exit in the event the stock closed above $2.20 at which time the option would still have $2.80 per share in intrinsic value.
DISCLOSURE: At the time of publication, I have no position in the referenced options or the underlying stock.
Sincerely,
Bill Kraft for
CutLoss, Inc.
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