advanced micro device They are under significant pressure for post-closing returns. The stock has been embroiled in a wave of AI controversy throughout the year, but its latest decline was triggered by a disappointing wave of tech company results.
Following Alphabet’s record decline last Thursday, Amazon and AMD’s longtime CPU rival Intel also suffered. Intel expects fourth-quarter sales to be significantly lower than consensus and expects PC sales to continue at least through the first half of next year. As a result, Intel’s stock price fell 29% on Friday, its worst day since the 1970s. AMD fell 10.9% on the day and another 7.5% on Monday, influenced by Intel and the broader technology sector.
Over the past week, AMD has been taking news from other companies with a grain of salt. Now your own number has the right to vote. AMD’s stock price reaction has been mixed in recent quarters, sensitive to guidance and high expectations from investors. Shares fell 17% after Q4 2025 earnings, but beats and guidance that beat expectations still overwhelmed some analysts. Results for the first quarter of 2026 beat expectations by about 6.5%, but the stock has since risen by 18.6%. Shares fell 7% after the second-quarter 2026 results, but the consensus-beating target still fell short of the $14 billion some analysts had hoped for. So while it can be difficult to determine direction, options allow investors to structure trades without having to choose sides.
trade
Based on Monday’s closing price, I would sell the Nov. 4 425/415 put spread and 510/520 call spread for approximately $3.65 in credit.
AMD’s 30-day implied volatility has been rising heading into earnings, with Monday’s close higher than about 81% of the days over the past year. This means that sellers are charging a richer premium than usual. To capture premiums while limiting the amount of time following earnings announcements, trading uses the Nov. 4 weekly. These contracts imply an increase of about 9% through Wednesday, which is in line with AMD’s 8.4% average gain between closes in its last 10 reports. The short strike is on the edge of the expected move, and the long strike is $10 away to limit the capital at risk towards profits. This is not a bet that the option will misprice a move or directional call. This is a neutral play aimed at profiting from the increased premium that tends to occur after printing.
AMD since the beginning of the year
If AMD closes between $425 and $510 on Wednesday, this trade would reach a maximum profit of $365. The break-even points were $421.35 and $513.65, about 9.7% below and 10.0% above Monday’s closing price, and slightly below expectations. If AMD closes below $415 or above $520, the maximum loss would be $635, or about 11% in either direction. This has happened in 11 of the past 40 reports, with AMD having made a huge 19% move in the last four, highlighting the importance of limiting risk with long wings.
If AMD closes between $415 and $425, you can assign a short put and are obligated to buy 100 shares at $425 per spread. Its cost basis after credits is $421.35, approximately 35% below its October 6 closing high. For investors who like AMD’s long-term story, this is a way to finally own the stock at a discount. If it closes between $510 and $520, a short call could be assigned, leaving a short position in the stock. Investors who want to avoid either risk should consider managing their positions before Wednesday’s close.
Disclosure: Spina owns this transaction.
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This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any security or other financial asset. The content is general in nature and does not reflect your unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor.
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