Out of Chips

Hi Shoppers,

If you have a teenage son, like I do, odds are these days that he’s a gamer.

When boys are younger, it’s so much easier to manage the amount of time they spend gaming.

Now, I’m about ready to put a padlock on the door of his computer room because I can no longer stay awake past 11 p.m. to shoo him off the game and into bed.

I guess it has provided some relief from the Covid lockdown and he is able to spend playing with a group of friends …

And must admit I was pretty impressed when he built his own computer a few years ago.

We even had a nice conversation recently about graphic processing units (GPUs) as I was researching a trade idea for Advanced Micro Devices (Ticker: AMD).

GPUs are graphics cards that are currently in short supply. Grant, my son, pointed this one out on Ebay as we chatted …

He said it regularly sells for $1,500-$1,900 — but it’s impossible to find right now.

I also found in my research that once these graphic cards are available for sale there are automated bots that buy them up just to resell them at these higher prices.

This chip shortage has also affected car manufacturers, who have slowed down or stopped production.

Forbes recently declared that “semiconductors are now the most important resource in the world” and compared the shortage to the 1970s energy crisis.

Given that the average electric vehicle has 3,000 chips that might not be hyperbole.

One thing that isn’t in short supply are great options plays …

My AMD Play

As I “shopped” for trade ideas, I found this doji on the AMD stock chart:

That doji is signaling the end of the downtrend in AMD that began on Jan. 12 when the stock traded a high of $98.97.

I like buying the Mar19 85/90 call spread paying $1.75-$1.80.

I will take my loss if the spread trades down to $1.10. I think this spread can trade up to $3.00-$3.50.

By the way, Grant says to get ready for Nvidia’s release of their “awesome” new graphic card in September — he would know!

Thanks for Reading … See You Next Tuesday!

Licia Leslie

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