I am recommending we roll the short legs of our Advanced Micro Devices (AMD) and Taiwan Semiconductor Manufacturing (TSM) LEAP call spreads out two weeks to generate more income and reduce our cost basis on the positions.
Given that TSM is expected to report earnings tomorrow, I am recommending we use the cash we generate to offset the purchase of protective puts. Note that this is purely a defensive position. The goal is for the puts to expire worthless. However, in the event the stock sells off sharply, these puts could be very profitable.
AMD Jan 2023 (1/20/23) 70/Oct Week Two (10/14) 70 Call Spread
Note: There is no action needed on the AMD Jan 2023 (1/20/23) 70 Calls at this time.
Current Stock Price: $57.78
Cost Basis: $100.54
Action:
- Buy to close 3 AMD Oct Week Two (10/14) 70 Calls for around $0.02 ($0.06 total)
- Sell to open 3 AMD Oct Week Four (10/28) 70 Calls for around $0.28 ($0.84 total)
- Set initial credit limit at $0.26 ($0.78 total), but adjust as needed to roll today
New Cost Basis: $99.76
TSM Jan 2023 (1/20/23) 70/Oct Week Two (10/14) 73 Call Spread
Note: There is no action needed on the TSM Jan 2023 (1/20/23) 70 Calls at this time.
Current Stock Price: $63.73
Cost Basis: $99.67
Action:
- Buy to close 4 TSM Oct Week Two (10/14) 73 Calls for around $0.10 ($0.40 total)
- Sell to open 4 TSM Oct Week Four (10/28) 70 Calls for around $0.84 ($3.36 total)
- Set initial credit limit at $0.74 ($2.96 total), but adjust as needed to roll today
- Buy to open 4 TSM Oct Week Two (10/14) 59 Puts for around $0.52 each ($2.08 total)
New Cost Basis: $98.79