Semiconductor stocks, including Advanced Micro Devices (AMD) and Taiwan Semiconductor Manufacturing (TSM), sold off this week on concerns about slowing consumer demand amid a recession and broader tech sector weakness. AMD was down significantly more than its peers, about 11% so far this week, due to reports that hackers may have stolen data from the chipmaker.
As you know, I believe consumer demand fears are overblown and that these are excellent companies to own long term. The stocks could see sharp movement – to the upside or the downside – later this week after competitor Micron Technology (MU) announces earnings, which are scheduled for tomorrow after the close. But I expect any rally or sell-off based on this to be short-lived.
I am recommending we roll our calls out one week and to lower strikes to generate more income and reduce our cost basis on the positions.
AMD Jul Week One (7/1) 88 Call
Current Stock Price: $77.46
Cost Basis: $116.29
- Buy to close the AMD Jul Week One (7/1) 88 Call for around $0.04
- Sell to open the AMD Jul Week Two (7/8) 80 Call for around $1.79
- Set initial credit limit at $1.75, but adjust as needed to roll today
New Cost Basis: $114.54
TSM Jul Week One (7/1) 87 Call
Current Stock Price: $83.94
Cost Basis: $122.54
- Buy to close the TSM Jul Week One (7/1) 87 Call for around $0.14
- Sell to open the TSM Jul Week Two (7/8) 85 Call for around $1.37
- Set initial credit limit at $1.23, but adjust as needed to roll today
New Cost Basis: $121.31