Advanced Micro Devices (AMD) 3/17/10 PriceWatch Alert Targets 22.15% Return

Posted: Wednesday, March 17, 2010 8:35 AM EDT
By: Market Intelligence Center Staff

Advanced Micro Devices (NYSE: AMD) closed yesterday at $9.40. So far the stock has hit a 52-week low of $2.43 and 52-week high of $10.04. Advanced Micro Devices stock has been showing support around 8.77 and resistance in the 9.73 range. Technical indicators for the stock are Bullish and S&P gives AMD a neutral 3 STAR (out of 5) hold rating. AMD appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at an Oct '10 9 covered call for a net debit in the $7.97 area. That is also the break even stock price for this trade. This covered call has a 213 day duration, provides 15.21% downside protection and a 12.92% assigned return rate for a 22.15% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the AMD Jan '11 5 Call and selling the Oct '10 9 call for a $3.22 debit. The trade has a 213 day life and would provide 12.55% downside protection and a 24.22% assigned return rate for a 42.00% annualized return rate (for comparison purposes only). Advanced Micro Devices does not pay dividends at this time. [WBA-Seven Summits Research]