Bank of America maintains a buy rating on AMD with a $720 price target, anticipating ~14% upside from AI-driven CPU demand.

Bank of America has a positive outlook for AMD (AMD) stock, reaffirming its " buy" rating and raising its target price to 720. This figure is higher than 620 and indicates a potential rise of approximately 14% from yesterday's closing levels.

Bank of America says that artificial intelligence opportunities are not limited to graphics processing units (GPUs), but that central processing units (CPUs) are a key part of the equation, and this is where AMD's role comes in .

This comes during a busy week for AMD CEO Lisa Su. Last night she attended a dinner at the White House with President Trump and Chinese President Xi Jinping, and earlier this week she was here at the New York Stock Exchange with First Lady Melania Trump to ring the opening bell.

Okay, now it's time for a " tug-of-war" segment about AMD's stock . Therefore, let us once again welcome back our co-hosts . With us are Kevin Hinx and Joe Mazzola . It's time for the bulls and the bears to clash.

Before we move on to your example, traders, we would like to know your opinions about AMD stock. He set a new record.

I mean, it's hard to stand up to a stock that has such strong momentum or to bet on it going down. So, the question you should ask yourself is: Do you think this rise will continue?

It's hard to say that AMD isn't a name with a high beta coefficient. It is trading, I believe, at a level of 2.4 in terms of the beta coefficient. AMD, as you mentioned, Diane, hit a 52-week high today, or in fact, an all-time high earlier today. It continues to move forward.

If you believe in this momentum story and believe in what AMD can do regarding the CPU and demand story mentioned by Bank of America in their analysts’ report. I see no reason to take the initiative and try to short sell or look for downside opportunities in this stock while all this strength is visible beneath the surface.

Now when you look at Akamai's deal with Anthropic, this is some of the basis for that, and here's the thing . AMD stands at the heart of the important turning point that artificial intelligence is experiencing thanks to AI on the Edge, because that means greater demand for central processing units, a segment that will continue to explode.

So when this deal happened, AMD's stock rose because they see the picture and the race to acquire CPUs and long-term deals. Therefore , this is entirely positive for AMD and its stock.

Well, I think Kevin and I share a similar point of view when we start looking at these trades. The first thing we do is take a look at the relative implied volatility , to see where it might have fallen over the past year.

When I looked at the current percentile ranking of implied volatility, I found it in the fifteenth percentile. This means that volatility is relatively cheap - and I use the word relatively here - compared to what it was last year .

When I see something like this, it becomes difficult for me to want to sell at a price difference. So, basically, what I would do is look for some kind of time difference, i.e., buy a time difference.

In this example, I am looking at a Qatari strategy. I think another reason I structured the deal this way is that I'm essentially selling a call option with an strike price of 660 that expires on October 5th.

I am buying a call option with an execution price of 630 that expires on October 16th. It is similar in nature to a covered purchase option, so to speak. You could do that for about $2360 at the time I priced this deal.

But the difference between this and the covered purchase option is very large in terms of cash outlays. If you sell a covered call option on a stock at $620, that means $62,000 less the option selling price.

With this type of trade, you can execute what is considered a slight upward trade , right? It is a slightly bullish, or neutral to bullish, trade, at a cost of approximately $2,360.

The way this trade works is that if the stock continues to move upwards towards the execution price of 660, you will notice a decline in returns after reaching that point. However, since you are able to trade this below the bid-ask range , if we were trading this above $30, you would see the earnings chart start to collapse once it crossed 660.

Now, yes, you are starting to see some kind of pullback, but it gives you the ability to profit from the upside if the stock continues to rise. The other thing I will also look at, going back to my initial statement when we started this conversation, is that this is a momentum arrow.

It is a stock with a high beta coefficient , and currently—but not forever— it has this momentum behind it. It's a short-term deal . Learn, October 5th is the month you will sell, and October 16th is the month you will buy .

So, we're not looking at the next 90 to 100 or, you know, 150 days. We are looking for a short- term upward move. We are looking forward to this continuing and pushing the price towards the strike price of 660.

Joe is right. If you are trading options, you need to understand implied volatility. Like stocks, just like anything in investing, you want to buy low and sell high. And now, implied volatility is at 13%, Joe, since we started streaming, it's even cheaper.

This should guide the type of strategy you follow. Well, Joe implemented a Qatari strategy. This is something from the calendar spread family, but what he did was include a vertical spread in it, giving him $30 as the difference between the long execution price and the short execution price.

But there is also the time factor, and he has the opportunity, if the market allows it, to extend the term and reduce that amount paid and make it much less. What I did is something closer to the family of calendar differences.

Like Meta, AMD shares are in overbought territory according to the Relative Strength Index. So, I looked at something, measured the expected move, and just looked at the calendar difference of a one-week put option.

So, we both buy "Vega" which is trading at a 13 percent threshold, both of us. This is one of the key points here, the strategies you should target. Know the strategies to follow when volatility is high, and know the strategies to follow when it is low.

One option is the calendar difference. So, what I looked at was buying a one-week option on October 9, and selling the $ 600 put option calendar difference on October 2. Simply put, what I did was look at whether the price dropped.

Remember, that gives me two things. It gives me a directional trade, which is about five " delta" units short, but it also gives me about 14 " vega" units in this trade. Therefore, you will benefit from the trend and from the high implied volatility.

Isn't that so? I placed it at around 540, and it is now trading at 550 as the stock dipped slightly as our broadcast began. So, if there is a lesson to be learned from this section, it is understanding implied volatility by buying low and selling high.

Joe is aligned with a rather bold Qatari strategy. This is what the Qatari strategy means . It replaces the stock with a long-term option. I am using the calendar spread for a less steep move down , looking forward to a drop towards the 600 level, Diane.

Both involve a specific risk. Now you need to be careful as the expiry date approaches if the price gets close to your strike price. But the risk in these deals is limited to the money spent on them, Diane.

certainly. I think it boils down to this. Do you think the stock has room to grow or will it stabilize after the big move it made? I think you can present a viewpoint on both possibilities, can't you ?

I mean, we've talked about the fact that it's actually gone up 40% in the last four or five weeks. It can easily be said that he will take a break , and perhaps he will stay the same or decline.

If that is the case , and if it does indeed fall back towards the 600 level, then that serves Kevin's put calendar trade perfectly. While my trades don't need much upward movement, they do need some upward movement.

Therefore, you need to be aware of this when you weigh the bullish and bearish arguments for these two deals, and which side you would like to take.