I construct a bullish trade on AMD with a potential 10x return on capital. This may be useful for traders who have a small capital but would still like to get a good return out of the trade. For this trade, I get an advance premium of USD 910 out of a 10-dollar spread on AMD. The max loss for this trade is USD 90, which means I am risking USD 90 to earn USD 910 (10x), trading on a strong semiconductor company like AMD.
Why I Am Bullish On AMD?
In the next few years, AMD will be a key player in the AI space and will compete with Nvidia in the production of semiconductor chips (CPUs and GPUs). In the short term, there is the CES event coming up which may boost AMD’s share price.
CES 2024
CES 2024, the world’s largest consumer technology trade show, officially kicks off next Tuesday (9 Jan 24) in Las Vegas, and is expecting to welcome more than 130,000 attendees and 4,000 exhibitors. Among them would be semiconductor chip powerhouses such as Nvidia, AMD, and Intel, which would showcase their latest technology and products.
My Plan
I plan to ride the bullish trend of AMD and take profits when I can, and not hold till expiration (16 Jan 26). It will be a good return if I can 5x my capital and close the contract with around USD400 ~ USD500 profits. The full details of my trades, alongside my other trades, will be updated on my Patreon page (usually on the same day or the following day). So, do follow me on Patreon if you would like to take my trades as a reference*.
Concluding Thoughts
This is a high-return trade with a relatively small capital and is suitable for traders on a tight budget or someone who wishes to try out options trading with a small capital. There is a long horizon (2-year contract) for the share price to withstand any volatility and continue to rise in the longer term. Furthermore, the trade is placed on a reputable company with a strong balance sheet. Thus, I think this is a relatively low-risk trade with good potential high return. Also, the best part is I can get an advance premium (cash) in my account to earn some interest while I wait for the trade to move in my favor.
* Disclaimer: Please do your own research and not copy trade for trade, I am responsible for my own loss and so are you for your loss.
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