AMD is right for the picking, shares are just too cheap. Sure the company sucks but that's nothing new. Shares closed the day at $11.28.

Here's some blogger that agrees:

http://www.stocktradingtogo.com/2007/11/20/todays-shopping-spree-amd/

Ladies and gentlemen, I Initiated the following position today:

Bought 6 blocks (60,000) of AMD at an average price of 11.32.  To hedge the shares, I decided to use a combination of “out of the money” and “deep in the money” Dec calls.  Thus this strategy is termed the “covered called” strategy where the calls’ premium will be provide a hedge against the underlying shares in a downside.

I wrote (”sell to open”) 200 Dec 11.00 calls at .98/contract, and 100 Dec 12 calls at .38/contract.  The strike 11.00 (deep in the money) will earn me .66/share in intrinsic value upon Dec option expiration, if AMD closes above 11.00/share.  If it closes below, I get to pocket the entire .98/share premium and keep the shares.   I wrote 400 Dec strike 12.00 (out of the money) calls which will generate .48/share, regardless if the shares are above or below 12 by option expiration. 

Here is my rationale: AMD today dropped 6.6%, to $11.28. Why? Well, I’m not sure. Last week, the company sold an 8.1% stake to a unit of Mubadala Development Co., an investment company owned by the government of Abu Dhabi, for $622 million, or $12.70 a share; the investment is already off 11.2%, a loss of almost $70 million.  But that is all just context; it does not explain today’s slide. 

 Let me be vey clear that I have never been a fan of AMD, especially during the times when the company had a solid edge over INTC (2003).  INTC has clearly reduced them to rebels since they launched a series of new generation chips (Zeon 5600 Core 2 Duo and Quad Core chips).  Now, with INTC’s new 45nm chip, Penryn, AMD is definitely behind.  Wachovia Capital markets analyst David Wong said in a note to investors that AMD’s quad core models worked at speeds well below Intel’s quad-core offerings, which top out at 3 gigahertz.  Tech Web site, AnandTech,  concluded that AMD’s 65-nanometer Phenom is inferior to Intel’s similar-sized chip.

However, we cannot undemine the fact that AMD will always be INTC’s number rival.   I fully undestand that AMD is cash starved at the moment… But at these depressed share levels, it’s a great “take-over” target! 

In addition to the above core holding, I will be scalping shares of AMD on an intraday basis to further maximize on the daily volatility.  Also, I will be adding to my core holding accordingly, at the proper pivotal points.