Article: AMD's Large Debt Mounting Up Fast

[sailer]

I do think there is a possibility that we have forged an unhealthy negativity to AMD future products that could backfire on all of us and apparently Intel is agressively trying to route any potential of just that.

Well, I've considered that myself, and seeing how Sirkillalot has made a few bucks over the past couple weeks, I took a drink of icewater and bought a few shares. No intention of keeping this around a long time, just try to ride it up .50-1.00 and then sell, taking a quick profit and getting out. Who knows, maybe AMD can buy my next video card. If the X2900 XT turns out to be better than predictted, it might even be one of those. If not, a 8800 GTS should fill the bill.

 

[sailer]

I do think there is a possibility that we have forged an unhealthy negativity to AMD future products that could backfire on all of us and apparently Intel is agressively trying to route any potential of just that.

Well, I've considered that myself, adn seeing how Sirkillalot has made a few bucks over the past couple weeks, I took a drink of icewater and bought a few shares. No intention of keeping this around a long time, just try to ride it up .50-1.00 and then sell, taking a quick profit and getting out. Who knows, maybe AMD can buy my next video card. If the X2900 XT turns out to be better than predictted, it might even be one of those. If not, a 8800 GTS should fill the bill.

I was tempted at yesterdays performance to do the same.

Yeah, and if things go down, well, I'm from Nevada and what do we do best other than gambling? I won't go into the other thing that the state's known for.

 

[Twisted_Sister]

BTW - If I were long or for those longs out there... I would be very tempted to buy some 2009 calls. You could really leverage your investment capital.

I will show my ignorance here. What are calls?

No problem... they are essentially options. "Calls" bet that the stock will go up over the excise price, "Puts" bet that the stock will go down in price.

First go here:

http://finance.yahoo.com/q/op?s=AMD&m=2009-01

In the Call section, let's take an example. The "15.00" is selling for $2.89. So essentially, once the price of AMD stock gets over $17.89 ($15.00 + $2.89 premium) you start to make money. Here's where you make a ton of dough:

Supposed you were confident that by Jan 2009 the price of AMD stock would be $20 or more and you only had $1000 to invest. Well you could buy the stock outright for $13.75 a share = 72 Shares.

By 2009, @ $20 you would make $6.25 a share for $455 in total profits.

Now, if you invested that same $1000 in the $15.00 Calls. You could buy the contracts for $2.89 each. So $1000/2.89= 346 shares.

Remember, you only make money when the contract goes above $17.89. So your profit would be $20-17.89 = $2.11 per share. But since you could buy 346 shares, your total gain is $730 vs. $455. The results get more pronounce if the price goes above $20.

The risk with options is that you DO NOT OWN THE STOCK... just the right to buy/sell it. So if the stock price is below $15 on the day of expiration of the option, you lose your entire investment. If its between $15.01 and $17.89... you can recover some losses (depending on the final price).

Options in of themselves also move in value as people speculate on stock. So you don't have to hold on to them till it hits the strike price.

For example, if it’s Jan 2007 and the option expires in Jan 2009... but the stock is already above $15.00 a share. The actual price of the option will be hire than the stock trading price. So, if the AMD stock is trading at $18 a share in Jan 2007, the $15.00 option (that you bought for $17.89) would now be trading at a substantial premium because it has a full year left and is in the black.

Research it though, I'm not a broker so please do not follow my advice (besides I'm bearish... remember) :lol:

Hahaha... 8 days later and this call is up 18%... go figure. :lol: