Right here’s How You Can Have Your Cake with AMD Inventory and Eat It Too – With Simply 6.6% Draw back Threat

For thus a few years, Wall Avenue handled Superior Micro Units (AMD) because the little brother of Intel (INTC). Particularly, the kind of siblings that struggle on a regular basis. AMD was the challenger, and there have been many cases when Wall Avenue analysts puzzled if it might survive.

Skip forward a few a long time, and whereas INTC is now 10% owned by the U.S. authorities, AMD is a $400 billion inventory in its personal proper. That’s greater than double the worth of INTC. But quite a lot of that ascension got here in a really brief period of time.

A 235% cumulative acquire the previous 3 years will do this!

I wrote about AMD for Barchart on Aug. 6, 2025. The inventory had simply rocketed up in worth, then slipped after releasing earnings. I concluded from my chart evaluation that AMD had upside potential, however that an possibility collar may take the sting off. By decreasing threat.

How? By defining a worst-case situation up entrance. That’s what the put possibility buy facet of a protecting collar does. The coated name is the opposite a part of the commerce, which is positioned round a number of 100 shares of a inventory one owns.

A later article on Oct. 7 mapped out an possibility collar between $200 and $250, expiring this January. Right here’s a fast historical past of AMD’s inventory worth throughout that point, by Monday’s shut:

Aug. 6: $163

Oct. 11: $212

Nov. 17: $241

So, what now? AMD reported earnings earlier this month, in order that’s out of the best way. However the tech sector is underneath quite a lot of stress. And at 15x gross sales and greater than 80x trailing earnings, AMD has the makings of a type of “I advised you so” tales. It’s now susceptible to any unhealthy information, whether or not it’s company-driven, sector-related, or a market-wide problem.

We don’t see too many shares this massive which have a 52-week worth vary from $76 to $267. In order a threat supervisor, my thought is, as at all times, to attempt to have my cake and eat it too.

A collar is simply as viable because it was the final two instances I wrote about AMD. And with the inventory’s current gyrations driving up its volatility, the choices pricing is extra favorable.

As we see within the image beneath, I can exit simply three months to subsequent February, and have certainty that I can’t lose greater than 6.6% on a inventory that has been a prime performer already.