"MU -- extremely oversold conditions. Yesterday before the close, went long the 10/26/2018 40.00 Call (up 42%).
AMD -- extremely overbought conditions, just went go long the 10/26/18 $31.00 Puts (up 16.6%)"
Just look at the levels for each. To be clear, both companies are solid / great stocks to own long-term, I'm just trading around all the volatility/profit taking.
Not sure how long I'll hold both of these, but I'll post updates periodically.
While I do expect more downside, I suspect it will be short-lived. Yesterday's sell-off was nothing more than profit-taking. Those are the dips I like to take advantage of and then move on (typically I would have sold already, but want to see how this plays out a bit longer).
As you can see, with shares up ~7%, investors want in this name -- driven by the improving fundamentals which lead to multiple analyst upgrades (this is one of the most love stocks out there right now). Average analyst price target is ~$40. This is why investors are stepping in today.
When I shorted AMD, RSI was at the overbought level of 85, now it's at 77. Historically, RSI for AMD can go to a high of +87. So we are in a trading range.
So, here's what I'm doing. I am maintaining my Oct-Puts and will hedge it with Oct-Calls. I'm looking at the 10/12/18 $33 Calls.
I'll likely buy these early next week. I don't typically like to open new positions on a Friday. Tho doesn't hurt to do so given that this is just a hedge position.
Enjoy the weekend everyone.
More updates to come.
I just went long the 9/28/2018 46.50 Puts (small hedge position).
Should be an exciting afternoon ;-)
More to come to stay tuned.
(accidentally posted this comment below lol)
AMD Puts are up +51%
MU Calls are up +30%
Total Gain +81% -- not bad for a less than 30-day trade ;-)
Going to keep these open, but trimming AMD to take in some profits. Totally up to you how you play it from here -- I'm not too greedy ;-)
I have another pair trade coming soon.
Stay tuned and congrats again.
Congrats if you stayed in.
Very strong move today, but I think there will be some resistance/profit-taking here. Hoping to collect some cash as sellers step in.
Also, forgot to mention that I opened the MU 12/21/2018 40.00 Calls in one of my portfolios. Not too late to get in this name (I'd wait for a small pullback)
AMD is a hold at best. I wouldn't want to play earnings (50/50 chances aren't my type of investments). MU is just left for dead until they report again in Q4.
As I mentioned above, the sell-off I'm capturing is related to profit-taking. I suspect more of it is to come, but wise to hedge at this point (revising Calls on Monday).