Advanced Micro Devices (AMD) dropped through its 50-day moving average on Monday as talk of the artificial intelligence bubble bursting starts to get louder. With that in mind, AMD stock is setting up as an interesting bearish candidate when looking for new option trades.
Today, I'll look at a setup known as a bear put spread. This is a bearish option trade that benefits from further downside in the stock price.
A bear put spread is a debit spread, meaning we need to pay the premium in order to open the trade.
On AMD, investors could set up a bear put spread by using the 440 strike as the long put and the 430 strike as the short put for the Sept. 18 expiration. Based on recent trading, this trade would cost around $355 per contract with a maximum potential gain of $645.
To achieve the maximum profit, this trade would need AMD stock to drop a further 13% between now and expiration on Sept. 18.
#sept #option
Today, I'll look at a setup known as a bear put spread. This is a bearish option trade that benefits from further downside in the stock price.
A bear put spread is a debit spread, meaning we need to pay the premium in order to open the trade.
On AMD, investors could set up a bear put spread by using the 440 strike as the long put and the 430 strike as the short put for the Sept. 18 expiration. Based on recent trading, this trade would cost around $355 per contract with a maximum potential gain of $645.
To achieve the maximum profit, this trade would need AMD stock to drop a further 13% between now and expiration on Sept. 18.
#sept #option
2 months ago
