I am recommending we roll the short legs of our Advanced Micro Devices (AMD) and Taiwan Semiconductor Manufacturing (TSM) LEAP call recovery positions out three weeks to generate more income.
I then want to use some of that cash to purchase protective puts to hedge our positions ahead of Apple’s (AAPL) earnings, which are set to be released after the close today. The hope is for these puts to expire worthless, but they could be very profitable if Apple disappoints like some of the other big-tech names and drags down the tech sector.
AMD Jan 2023 (1/20/23) 70/Oct Week Four (10/28) 70 Call Spread
Note: No action is needed on the AMD Jan 2023 (1/20/23) 70 Calls at this time.
Current Stock Price: $60.81
Cost Basis: $99.76
Action:
- Buy to close 3 AMD Oct Week Four (10/28) 70 Calls for around $0.02 each ($0.06 total)
- Sell to open 3 AMD Nov Monthly (11/18) 70 Calls for around $0.93 each ($2.79)
- Set initial credit limit at $0.91 ($2.73 total), but adjust as needed to roll today
- Buy to open the 3 AMD Nov Week One (11/4) 54 Puts for around $0.67 ($2.01)
New Cost Basis: $99.04
TSM Oct Week Four (10/28) 70/Oct Week Four (10/28) 70 Call Spread
Note: No action is needed on the TSM Oct Week Four (10/28) 70 Calls at this time.
Current Stock Price: $62.30
Cost Basis: $98.79
Action:
- Buy to close 4 TSM Oct Week Four (10/28) 70 Calls for around $0.01 ($0.04 total)
- Sell to open 4 TSM Nov Monthly (11/18) 70 Calls for around $0.42 ($1.68 total)
- Set initial credit limit at $0.41 ($1.64 total), but adjust as needed to roll today
- Buy to open 4 TSM Nov Week One (11/4) 55 Puts for around $0.22 ($0.88 total)
New Cost Basis: $98.03