Advanced Micro Devices (AMD) Stock: Options Traders Anticipate Significant Volatility Ahead

Investors in Advanced Micro Devices (AMD) should closely monitor the stock based on recent activity in the options market. The Jan 19, 2024 $105.00 Call has displayed significant implied volatility compared to other equity options.

Implied volatility is a measure of the market’s expectation for future movement. High levels of implied volatility in options suggest that investors anticipate a significant move in the underlying stock, either upwards or downwards. This could indicate an upcoming event that may trigger a substantial rally or a major sell-off. However, it is important to consider implied volatility as just one factor when developing an options trading strategy.

In terms of the company’s fundamentals, Advanced Micro Devices is currently ranked as a Zacks Rank #3 (Hold) in the Electronics – Semiconductors industry, placing it in the bottom 24% of the Zacks Industry Rank. Over the past 30 days, no analysts have increased their earnings estimates for the current quarter, while 12 analysts have revised their estimates downward. As a result, the Zacks Consensus Estimate for the current quarter has decreased from 89 cents per share to 77 cents.

Given the sentiment among analysts regarding Advanced Micro Devices, the high implied volatility could present a trading opportunity. Experienced options traders often seek options with elevated implied volatility to sell premium. This strategy aims to capture decay, with the hope that the underlying stock will not move as significantly as initially anticipated by expiration.

For those interested in trading options, Zacks Executive VP Kevin Matras has developed a simple yet powerful approach that has yielded impressive profits. These trades also have the potential to reduce risk.

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This news article originally appeared on Zacks.com.