QuantitativeExhaustion

AMD Million Dollar Game Plan

Sometimes waiting is the hardest part of investing.

For most poker players, sitting and waiting is part of the game. The best players wait out those premium hands for perfect opportunities. For you non poker players, premium hands are those two cards your dealt (A-A. A-Ks, K-K, A-Qs, Q-Q, A-Js, J-J, 10-10 A-10s), which offer a high probability of winning without seeing the next dealt three cards. There are also situational plays you make in poker, but that takes both practice of timing and understanding of positioning. Although premium hands are easy to play, truly my favorite hands to play are suited connectors, 8-9s, 7-8s, 7-6s, 6-5s, 5-4s 4-3s, 2-3s. However there is only a few times I'll play these unwanted hands. If the table has been tight (not much betting) and if I'm near the dealer/last to play with more than half the table already in the pot. What often happens everyone is playing premium hands, and there's a high probability that lower cards are dealt out by the dealer. I've won some monster pots with this strategy, knocking out triple Aces/Kings/Queens, with a straight or two pair vs A-A, K-K or Q-Q. The pots are often high, because no one considers to be going up against low suited connectors.

For AMD             a poker analogy fits well for both stock and options. AMD             stock and options volume has been going down significantly (tight table). AMD             is no doubt a sneaky low hand that no one is really considering to be a monster play. We do have a few tells to give us information about AMD's chances of hitting a big pot with stock options. Before former CEO             of AMD             Rory Read left after 4 years, he told us AMD             still has to get through 18 months of old technology before new chips are available. Well Mr. Read stated this on Sept. 4th, 2014, giving us a window of late 2015 to early 2016 as a time when we could see big announcements. Perhaps those APU's, we've been waiting for in mobile devices and tablets. Mobile and Tablet SoC's would greatly help build big revenues for AMD             , taking share from MediaTek, Qualcome, Nvadia, and Intel             . AMD             has been working with ARM Holdings and Oracle             (java9/JDK-JRE) for almost three years now, building an ARM/AMD Hierofalcon server system. If the ARM/AMD new server system is as big as the hype, they could take large market share quickly from Intel             . AMD             could also gain traction in desktop CPU's as well, where Intel             pretty much has a monopoly, and where company's like Apple             are looking for an alternative.

For investment, I would start buying shares of AMD             in the 2.05 to 1.70 range. If we trade below 1.70 support, I would wait to see where this last leg takes us. Although I find it hard to believe AMD             will go much lower than 2.00. AMD             recently restructured it's debts and has enough cash to last through 2020. AMD             revenues are growing and expenses are in check, plus they have new products coming on-line, just at a later date than most wanted.

Strategy for Big Pot

For a chance to take down a big pot, I would play an option bet after waiting for those HV, IV signals I mentioned. For now, 3.50 Jan. 2017 calls or April-June 2016 (when they come available) might be the best bet. If IV goes below HV, when HV 30 reaches historical lows and AMD             stock trades near 2.00 sometime late 2015 (December), I imagine Jan. 3.50 options will be selling for .10 or possibly less and April 2.50 Calls near a penny.

Also important to note, is the fact that AMD             has been holding 20 to 25% short interest for several years. If AMD             does become complacent at the 2.00 level, this could cause shorts to get nervous and start covering while new AMD             investors start buying up shares. If this would happen I would guess that AMD             will start moving higher later next summer, rather than late next year.

1990 was the lowest HV (30) reading ~20.0

Entry: 1.80 to 2.05
Stop: 1.65
Time of Entry: Implied Volatility ~20/25

2use
2 years ago
But investors are running away from it already even though revenues are growing?
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After Rory Read made the announcement back in September investors got tired of waiting. It's going to take another floor and build of support before AMD can lift off again. This time though AMD will get it right and make good on it's promises.

My biggest concern is SO count and further dilution. I'd like to see Lisa Su announce a share buyback next year after all the cost cutting.
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Here is a look at the steady revenue increases, although a slight downturn recently, vs operating expenses which have been contained since former CEO Rory Read took over. Lisa Su, the new AMD CEO, already set a quick standard that she too would continue to contain expenses.
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Thanks for the chart! I will be watching closely. My only concern is the realization that graphene chip tech will eventually destroying silicone valley. AMD's going to have to restructure their entire system to adapt and survive. I'm not trying to FUD AMD, it's just a known fact that in a few years graphene will revolutionize microchip tech. What's your take on the matter? Am I just over thinking the situation?
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QuantitativeExhaustion PRO Craig_Claussen
2 years ago
Wouldn't Intel, Nvadia and others have the same problem? I've not done enough research in graphene chip making. IBM recently sold its silicon chip making business, perhaps because they believe graphene will be the standard in a few years. The performance looks to be there, but I'm going to assume that the cost to make these commercial graphene computer chips is much more expensive than the standard silicon chips we have today. Perhaps IBM will be a good investment 3-4 years from now, when we start seeing Graphene chips in higher end consumer tech.

http://www.extremetech.com/extreme/175727-ibm-builds-graphene-chip-thats-10000-times-faster-using-standard-cmos-processes
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For AMD HSA is a BFD.

Jim Guilford lead Intel chip engineer, even spoke about HSA earlier this year, and admits Intel made a mistake by not going in the direction of parallel computing (HSA). AMD led the charge to put the HSA foundation together and looks to capitalize 2016 and beyond.


http://developer.amd.com/resources/heterogeneous-computing/what-is-heterogeneous-system-architecture-hsa/
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Cautious and pessimistic seems to be the sentiment with AMD. AMD has been knocked out by every quarter release since my last bull market call Spring of 2012. Nothing other than marking down old inventory and getting a write down with a boost in revenue, is all that's going to show up on the bottom line this up coming 4th quarter. People are thinking XBox sells and PS4 sells are going to be the driver, are mistaken. Big deals are coming, just not for another 9 months at the least.
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This might look unrealistic to many, however if you have been following AMD stock, over the years you'll notice price reacts quicker on the way up than on the way down. This is the opposite of the general idea of most underlying stocks and indexes. With fast rising prices like AMD stock tends to have, you also get a big multiple on volatility. With AMD price near historical lows and volatility starting to follow historical territory, we could get a chance of a lifetime with AMD Call Options. Earnings dates are very important to AMD, as you can see in the chart. Once we get one very positive earnings release, news will matter again. PR with updates on AMD future technology will push share price higher, and with a second confirming positive earnings, AMD share price will move even faster.
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Book Value is an easy evaluation method, share price / equity (assets - liabilities). However, BV does not include patents, brand name, goodwill and other intellectual property. AMD assets are mostly patents. It is difficult for companies to put a dollar amount on patents, but it's said that AMD patent portfolio is somewhere between 1.5 to 2.2 billion. With those evaluations that means AMD currently priced near or below book value.

Early 2013 AMD had about the same BV. Since that time AMD has evolved it's business model, and earns much of it's profits with semi custom chips. Plus since 2013 AMD has developed very close relationships with Apple and ARMH, strategic partnerships another asset that can be priced on BV.
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QuantitativeExhaustion PRO QuantitativeExhaustion
2 years ago
...asset that can't be priced on BV.
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@JR, check the phases. Large DSS phase is topping over and the short phase is about to cross positively. This short phase should allow a small spring upwards but when this large phase crosses negatively, price will be in a compression. When that compression is over I think you will see the upward trends you are looking for. I will be watching this stock as well, looking for the opportunity to add it in the portfolio for a long time.
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QuantitativeExhaustion PRO coondawg71
2 years ago
So what's your estimation when we see your compressed prices, and when is your estimated time of a breakout?
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TimWest gave me this idea. Much different this time around. Both Revenue and Margins are better while we find our fundamental footing.
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Fundamentals are going in the opposite direction of price. Stock price keeps fading while fundamentals have been improving. The only problem I mentioned was the fact that a few products that were expected to be ready early next year we're delayed by a year.
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2use QuantitativeExhaustion
2 years ago
its the investor sentiment im worried about - Looks bearish to me
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Well of course it's bearish. Everyone is dumping there end of the year baggage. AMD is a big loser in many fund managers portfolio. Let's keep a keen eye on 1.95/2.05
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2use QuantitativeExhaustion
2 years ago
Im buying at 1.50 in any case, may start getting it at 2.00 already. These two psychological numbers should gain some %


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$1.50 That would be great! Although breaking through the all-time low might 1.70 might unsettle many investors who are still holding out for AMD turnaround.
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2use QuantitativeExhaustion
2 years ago
Treasure hunters buyin, that is what i am looking out for. I dont think investors will be left by 1.70, not after 4.00
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i just read an article where AMD revised there future earnings forecast for 2015. They said 1st qrt would come in 15% less than expected. So this could take AMD to a low level, once it in fact confirmed that earnings in the 1st quarter are less than what was expected. We got a long wait for those results. So we might hit your 1.50 target in the 1st half of 2015.
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2use QuantitativeExhaustion
2 years ago
Well, it would be even sooner than i expected. i thing price will be bouncing between 2.5-2.25, 2.25-2.00, 2.00-1.75, 1.75-1.50 with the largest moves on ERs and forecast updates.
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Well I wouldn't assume it's going to 1.50. 15% revenue revision and lowering bond rating to B- is of concern.

If I see Implied Volatility right around 20, I'd take a position. AMD Implied Volatility normally trends in the 40-50 range, has seen breakouts up to 150.
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2use QuantitativeExhaustion
2 years ago
True, 2.0 is one of the numbers im in. But i dont trust one indicator on a usual basis, i need several plus feel the attitude. This stock is highly manipulated, so i wont expect much of logical play here as well. It is more speculators and bargain/short hunters
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From what I've read and through trial and error, option implied volatility has by far the best result in predictive outcomes. If you also weigh in technical price indications you improve your odds a bit better. Take in fundamental analysis as well, and you've got three indications to improve your probabilities in a mid to long term forecast. However, for me it all starts with Implied Volatility.

For AMD I also looked at product pipeline and competitions products, improving my analysis to forecast future earnings and revenue (fundamentals). I'm getting better odds with all this analysis.
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2use QuantitativeExhaustion
2 years ago
Do you consider it to be the best of the volatility indicator? any backtest on other stocks? I dont base analysis on volatility only, but take it in account (and am not the best trader out there).

With this, why wont indicators update with the chart when you hit Play? really annoying and ...kinda makes charts lose usefulness because people cant quite check the outcome regarding indicators if you check the chart later on.
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TradingView doesn't offer Implied Volatility. It's a function of Stock Options. THere is a difference between price volatility and option volatility. You're getting a discount on option prices when Implied Volatility is below price volatility indication, such as historical volatility. There is also a higher degree of probability when Implied Volatility nears "overbought" based on historical readings, you have a greater odds of seeing an explosion in price action. This is why I like to look for several price sqz indications, oversold prices, divergences, short interest along with Implied Volatility.
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AlphaxRx
2 years ago
There's a good chance the trough will appear in 2016 rather than 2015 as you predicted. The semiconductor down cycle typically is 3 years.

http://www.gartner.com/newsroom/id/2876317
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QuantitativeExhaustion PRO AlphaxRx
2 years ago
Good sector analysis, something I'm lacking a bit with overall analysis and comparing to AMD.

Another view of sector comparison, SOXX vs AMD. You can see AMD typically follows the SOXX, however the trend has been fading.
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Where as Intel and Nvidia have improved in comparison to the overall Semiconductor Index SOXX
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This expected overall semiconductor slowdown in 2016 could keep AMD from reaching it's expected share price valuation, mainly because many funds insert money into indexes rather than individual stocks. However, I still am going to hold out for early 2016 for AMD to improve overall fundamentals and therefore improving share price.
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Global Foundaries says producing AMD smaller nodes will be pushed back even further. Once this gets mentioned by Lisa Su, stock will probably take a dive to 2.25.
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LastBattle
2 years ago
http://www.extremetech.com/extreme/202066-samsung-may-be-mulling-an-amd-acquisition-heres-what-could-happen

Here's another. Samsung acquisition, which is highly speculative yet.
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kakola
a year ago
http://www.kitguru.net/components/anton-shilov/microsoft-is-interested-to-buy-advanced-micro-devices-source/
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kakola
a year ago
Is anyone able to get this load new bars?
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