by Ian Harvey
September 18, 2018
OUT WHILST THE GOING IS GOOD!
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
Advanced Micro Devices, Inc. (NASDAQ:AMD)
Advanced Micro Devices continues to climb higher. An option call trade was recommended to “Armchair Trader” Members on Thursday, September 06, based on bullish notes stating “a great technical position, and a great fundamental story behind it.”
PATIENCE PAYS OFF!
YOU NEED TO BE IN TO PROFIT!
Advanced Micro Devices, Inc. (NASDAQ:AMD), a global semiconductor company, has seen its shares rally on bullish notes from Jefferies analyst Mark Lipacis as well as Cowen bulls.
The stock soared 11 percent on Tuesday following the bullish notes from Wall Street analysts. AMD is now up 173 percent and is the S&P 500's top technology stock in 2018. Technical analyst Todd Gordon of TradingAnalysis.com says AMD shares could surge to $30 per share, a level the stock hasn't seen in 12 years.
"This is obviously this chip story stock here; it's in a great technical position, great fundamental story behind it here, and I like it a little bit higher here," Gordon said.
In a note to clients on Monday, Jefferies analyst Mark Lipacis lifted his 12-month price target for AMD shares by 36% from $22 to $30. His new forecast implies a 7% upside from Tuesday's close at $28.06. The analyst estimates that by the second half of 2019, AMD will have a faster chip than Intel for the first time in recent history marking a “foundational shift in competitive dynamics.”
AMD has been viewed as a beneficiary of setbacks faced by Intel in moving to its next-generation 10-nanometer chip technology, which the firm now says is slated for release by the 2019 holiday season. Meanwhile, AMD is expected to release its faster, more power-efficient 7-nanometer server chips next year.
Jefferies lifted its 2019 AMD server chip market share estimate to 12% from 8%.
"Meanwhile, our checks also suggest that AMD continues to take share in high-end notebooks," added Lipacis.
Bulls at Cowen echoed the bullish sentiment on AMD shares, lifting their 12-month price target from $25 to $30 and citing advantages of getting to market with a faster chip before rivals.
"Intel's delayed 10nm roadmap — originally targeted for 2016 launch in client and now pushed to 2H19 — opens opportunities for AMD across the business," wrote Cowen's Matthew D. Ramsay in a report released on Monday.
AMD has seen its stock price skyrocket 1,442% over the last three years, from under $2 per share in August of 2015. Shares of AMD did go through a slow stretch during this time period, but have returned to impressive growth recently. AMD stock was up over 135% before Tuesday's gains over the last six months, which crushes the S&P 500's 7% jump and its industry's 2.4% pop.
** OPTION TRADE: Buy AMD NOV 16 2018 30.000 CALL at approximately $2.80.
Place a pre-determined sell at $5.60.
Also include a protective stop loss of $1.10.
The Result So Far………
Last Thursday saw AMD shares have been setting fresh 12-year highs, rising to levels not seen since 2006, when the stock traded as high as $42.70 in March, only to crash down to $16.90 by late July of that year. On Thursday, the stock traded as high as $34.14, a 6% gain.
AMD shares were the most actively traded on the S&P 500 index SPX, -0.56% on Thursday -- a common occurrence of late -- at volume of more than 301 million shares For the past 52 weeks, AMD, on average, has been the third most active traded stock at 66.2 million shares on the S&P 500 index.
So, for “Armchair Trader” members, who managed to execute this trade recommended by Stock Options Made Easy; and had an exit price already established, profits of 100% were made.
Entering the option trade at a cost of $2.35 (although suggested at $2.80) or less; and the sell price on the option was set at $5.60; a profit of 100% was made within a week. The option trade price went as high as $6.67 during Thursday’s trading. Therefore, one options contract would provide a profit of $280.00; or 100% Profit.
If the trader had bought at $2.35 and sold at $6.67, then one options contract would provide a profit of $432.00; or $184% Profit.
A NICE FINISH TO THE WEEK!
However, after surging higher on Thursday morning the stock price swung down midday to finish 5.4% lower at $30.48. Friday morning, however, shares rose 3.4% to $31.55.
Even with Thursday’s pullback, AMD shares are still up 15% for the week, compared to the PHLX Semiconductor Index’s 1.2% gain. AMD’s stock price has been on an unprecedented run over the past 99 trading days, rallying more than 220%, and is up 201% for the year. That puts AMD’s stock run in the league with some of its best yearly stretches.
The rally just won’t stop. The chipmaker has been on a tear for the past several months, and the stock refuses to cool off. Every day, it seems like analysts are upgrading AMD stock and/or somebody in the media is saying something positive about market share gains.
On Friday, Argus analyst Jim Kelleher hiked his price target on AMD shares to $40 from $23. As well, on Thursday, FBN Securities initiated an outperform rating and a $40 price target on AMD’s stock. Shares closed above $30 for the first time in more than 12 years Tuesday after Rosenblatt Securities analyst Hans Mosesmann hiked his price target on AMD to $40 from $30.
AMD almost always reacts positively to those catalysts. As such, every day, it seems like the stock rises a few percentage points.
All told, AMD has gone from under $10 in late April to over $30 today. That is a more than 200% rally in less than five months.
AMD will be looking to display strength as it nears its next earnings release, which is expected to be October 23, 2018. In that report, analysts expect AMD to post earnings of $0.12 per share. This would mark year-over-year growth of 20%. Meanwhile, the Consensus Estimate for revenue is projecting net sales of $1.71 billion, up 3.95% from the year-ago period.
ACTION TO TAKE…….
** A New Options Trade To Consider: Buy the AMD NOV 16 2018 35.000 CALL at approximately $3.50.
Place a pre-determined sell at $7.00 if you wish.
Also include a protective stop loss of $1.40.
NOTE: With the continued tariff situation at-hand, check the direction the market is heading before executing the trade – you may be able to enter the trade at a discounted cost.
As you would have by now realized, some of our trades are based on earnings predictions. This is not to say all trades recommended to members follow this pattern, as obvious in this case where the trade was based on varying factors; but during earnings season this strategy of predicting earnings has been very profitable.
Sometimes it is our approach to predict whether a company will beat or miss estimates, whether the stock will appreciate or depreciate as a result and what strategies investors and traders can use – such as found with the “Earnings Predictions Program”. This type of prediction is based on thorough investigation and fundamentally based research, and the results have been very exceptional.
Strategies to Consider……
It is also worth considering, when options trading earnings reports – “Do we exit on already existing profits or leave the companies to report their earnings and hope for bigger profit?” .....READ MORE.....
"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.……continue reading this article……
Our proven track record says it all!!
Members of Stock Options Made Easy are provided with an extensive reason as to which direction a stock will move after earnings, followed up by a recommended options trade.
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