Bearish outlook for AMD stock with potential for profit through put options

From Nasdaq: 2024-12-09 12:20:00

In 2024, US indexes continue to trend upward with technology stocks leading the way. Better-than-expected corporate earnings, lower inflation, and interest rates contribute to the market surge. However, many stocks are overextended, offering few low-risk entry points for long investors as institutions prepare for tax-harvesting strategies.

Advanced Micro Devices (AMD) stock, part of the Computer – Integrated Systems industry, is currently lagging behind competitors. Bank of America downgraded AMD to Neutral from Buy, citing downside risks to its 2025 outlook. Stock with falling earnings estimates tend to underperform the market over time.

Options offer flexibility to tailor strategies in a changing market environment. Options give the buyer the right to buy or sell the underlying stock at a fixed price, known as the strike price. Put options allow investors to profit from a decline in stock price. Targeting AMD for a put option purchase could capitalize on its downward trend.

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For investors looking to capitalize on the potential decline of AMD stock, utilizing put options can provide leverage and limited risk. By purchasing put options, investors can profit from a decrease in stock price without the need to borrow large sums of money. Managing risk by minimizing time value and maximizing intrinsic value is crucial in option trading.



Read more at Nasdaq: Weekly Option Windfall: Bearish AMD Pattern Sets Up Short Opportunity