AMD - EARNINGS / STRATEGY / SUGGESTED PLAN OF PROTECTION

0. Morning;

1. AMD looks to open at $49.75, which is support and resistance possibly at this point;

2. Earnings after the Bell for just about everybody who counts; AAPL, AMD, etc;

3. This will set the stage today for 2020 we believe;

4. We have done the following last week, when AMD was just around $50 / we wanted to prepare for the Virus nonsense, and Earnings;

5. We

A. SOLD the March 20 AMD $50 CALL for approximately $5.00 / That is $5000 for every 1000 shares you OWN;
B. BOUGHT the Feb 7-21 (somewhere in here, depending on what you want to pay) AMD $45 PUT for approximately $85c / That is $850 for every 1000 shares of AMD you OWN;
C. BOUGHT the March 20 $55 CALL (yesterday), at $2.00 or so, this allow us to capture upside if we kill it. This is optional, depends on your budget.
C. Wait for earnings.


6. If we launch above $55, well that is fine after earnings, we can roll our CALLS out and up, lets see on this one;

7. If the stock tanks, we are good to $45 a share (We got $5 for the call), and we have the $45 put, which (depending on the date, Feb 21 best here), we will have protection beyond that.

8. We also have the $55 call, you can also use the 2021 $65 or whatever you want to make sure you don't lose your stock if you sell Covered Calls, and we kill earnings.

9. Forget the VXX, UVXY, TVIX, and volatility in general, especially GLD, these are all virus plays at this point, and you don't need non-correlated garbage that mathematically may not protect us adequately due to Gamma Scalping (suppresses volatility artificially).

- drchelsea

Comment:

0. Also, on CNBC yesterday you hear the "smart money" fund guys saying they didn't do much yesterday, just a "little gold, nothing exciting". Once again, looks like confused investors with no real trading ideas, who simply use the "buy gold" as they have no other strategy. This makes this strategy a "lazy trade", and you will get smoked at some point here, when it unwinds.

Comment:

Buying Gold right now, is like shorting volatility. You are picking up nickels in front of a steamroller. You will get flattened at some point.

Comment:

Of course if you have a Gold position, you don't have to sell it. Also, you can use volatility, especially if you own a lot of semiconductor stocks, as the correlation is about 90 percent at this point, to hedge a large position. The problem here is that AMD earnings are AMD specific. The whole market can rally tomorrow, and we can open at $42.50. Just remember that we stand here:

January 29th open:

$52.50+ (84 percent)
$47.50- (16 percent)

You always need to plan for that 16 percent possibility. You don't know the future. This is your money.

Cheers.

Comment:

AMD $50.17 / $50.19