AMD Going Up

Hi Shoppers,

 

The school year is almost over — woo-hoo!

 

You know what that means, right?

 

Time for summer camp!

 

Grant, my son, has been going to the same camp in the Northwoods of Wisconsin every year since he was nine years old.

 

It has been fabulous for him (and us).

 

Camp teaches leadership and independence. He’s met kids from all over the U.S. and several countries.

 

We can actually see the changes in him when he comes off that bus every year.

 

This year, he returns as an assistant counselor, which should be a great learning experience. He’s also driving himself up there, an almost six-hour trip. First time for that, too.

 

It’s an all-boys camp and their motto is “To be kind, because manliness requires kindness.”

 

Actually, here is their creed which is a nice reminder to us all:

To enjoy the Great Outdoors as one of the gifts of life
To greet the dawn with a smile and the mess call with a laugh
To spread sunshine and good cheer, just for the fun of it
To play every game on the level, win modestly, lose gracefully, and have a kind word for the opposing side
To speak the truth and to think the truth
To cooperate with other campers and find pleasure in lending a helping hand
To try to see the other fellow’s side of the question and strive for harmony
To be kind, because manliness requires kindness
To be strong, because self-reliance is born of strength
To be careful, because recklessness is the admission of unwise judgment
To be too generous to bear a grudge and too good natured to pick flaws in others
To aim for self improvement
To be a “regular fellow,” a pal to other campers, a friend in manner and deed, a booster rather than a knocker, an optimist rather than a pessimist, and a gentleman under all conditions and circumstances

We’ve been fortunate enough to be able to send Grant to camp every year.

 

There is an organization that helps children of prisoners go to camp every summer, check it out.

 

On to the Trade

 

Thanks for your patience (and consideration!).

 

As a reward …

 

Check out my trade idea in Advanced Micro Devices (Ticker: AMD)!

 

AMD is breaking out and I think it will be trading higher next week. Nvidia (Ticker: NVDA) broke out also in the same sector, chips.

 

 

AMD closed at $80.06 yesterday and I think it could trade back up to the $84-$85 area by Friday.

 

Since I think this will happen by Friday, I will buy calls expiring June 04 because they are cheaper.

 

 

I would pay up to $1.20 for the June 04 80-strike calls. 

 

As you can see, there isn’t any premium in the out-of-the-money calls to sell against these. 

 

Anything worth selling would be the 81 calls at $.75, but then you would be limiting your upside.

 

You would have a $1 spread for $.45, with most you can make being $1. No fun there!

 

So, I like buying the calls outright. I will take my loss at $.80 and begin to take my profits at 

$2 and higher.

 

Let’s Review

 

      • AMC Entertainment (Ticker: AMC) … Wow what a ride!

 

The June 18 18-/28-strike call spread I paid $1.70 for on May 26 traded up to around $5. 

 

I have taken four of my five spreads off for an average gain of 81%!

 

Initially, I was taking the money as the stock traded higher — but, man, it just kept going … and so did the vol!

 

I am still holding one spread. It’s very interesting to watch what is happening to the implied volatility in there. 

 

The crazy call skew (out-of-the-money calls with much higher implied volatility than at-the-money calls) is messing with my vertical spread.

 

It is keeping my short call too high, therefore I am hanging onto my last spread.

 

OK, enjoy Memorial Day Weekend with your loved ones, and remember those that have sacrificed for us.

 

Thanks for Reading … See You Next Tuesday!

 

Licia Leslie

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