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
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.
Where as Intel and Nvidia have improved in comparison to the overall Semiconductor Index SOXX
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.
QuantitativeExhaustion
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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.
A-shot
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its the investor sentiment im worried about - Looks bearish to me
QuantitativeExhaustion
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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
A-shot
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Im buying at 1.50 in any case, may start getting it at 2.00 already. These two psychological numbers should gain some %
QuantitativeExhaustion
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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.
A-shot
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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
QuantitativeExhaustion
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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.
Here's another. Samsung acquisition, which is highly speculative yet.