Entered an AMD Bull Call Spread

Today I entered an AMD Bull Call Spread that will expire this Friday. I continue to study this strategy, trying positions with both In-the-Money and Out-of-the-Money positions, or a combination of one of each. Today’s position I went with an In-the-Money Long Call and a Short Call that was At-the-Money. That Strike Price is $192.50 and that is where the stock was when I sold that Call.

 

3/18/24 – Buy 2 AMD 3/22/24 $187.50 C @ $8.06

3/18/24 – Sell 2 AMD 3/22/24 $192.50 C @ $5.60

Net Cost = ($2.46)

This Bull Call Spread has a Net Cost of ($2.46). I bought the $187.50 Long Call for $8.06 and I sold the $192.50 Short Call at $5.60. The difference in the two Strike Prices is $5. Remember, the Maximum profit comes when the stock closes above the Short Call’s Strike Price which is $192.50. If that happens you calculate the profit by taking the difference between the Strike Prices and subtracting the Net Cost of $2.46. $5 –  $2.46 = $2.54. The total profit is $2.54 times 200 because of the 2 contracts, which is $508. Let’s hope the stock closes above $192.50 at the close of Friday. As I write the stock is at $192.20.

This would be a Return on Investment (ROI) of 206.5%

Any questions on this strategy send me an email.

 

Successful trading,

Steve

The Options Coach