Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Could someone explain "max pain" to me, please?
It is based on the number of outstanding calls and puts for a given expiration date. I don't have the time right now to write a super long explanation, but I'll give you the basics.
Every strike price has a certain number of contracts open for both puts and calls. Max pain describes the point where all these open contracts (both puts and calls) are worth the least amount in total value for that expiration date. The idea is that calls that are in the money are likely to be exercised and the shares will be immediately sold. The higher the price, the more call options that are worth something are out there. So outstanding calls near the expiration date tend to appear as more sellers of the stock on the market. The opposite is true for put contracts. They tend to appear as more buyers of the stock. The max pain price represents where the number of sellers and buyers are equal.
Some months this can end up being many millions of shares being exercised and then the underlying position getting closed.
The hole in the theory is you don't know the underlying position of the call and put holders. They may exercise and not sell or buy the shares, but rather keep the position. They may do this because they already have an offsetting position, or they just want to continue the position with shares. For instance a call holder may exercise and decide to hold on to the shares instead of immediately sell them. If that call buyer was already short shares, they would simply be covering the short without actually making a stock trade.
But most of the time option holders exercise and immediately close the position. That is the theory.
LOL. That ended up being pretty long...
Has Toshiba ever sold AMD systems?
Toshiba very briefly made a few AMD based notebooks based on the K6-2. Do a search on google for 'Toshiba AMD laptop' and you'll turn up a few hits. Here is one example:
http://www.mcscom.co.uk/product.php?xProd=271&xSec=17
They never made any desktops, and Toshiba only carried these for a very brief amount of time (maybe 2 or 3 quarters).
This shows one of two things:
1. Toshiba might use AMD again as they already did it once
2. Toshiba won't use AMD again, because their earlier experience with them was bad (hence the short lifetime of these notebooks).
I wouldn't be surprised to see them using AMD again.
where's max pain at right now
12.5
I believe this is holding AMD down at the moment. I suspect a multi-point runup next week before earnings.
Mark my words, when Doom III finally comes we will see a pop.
A lot of big games that beg for computing power were delayed into 2004. Doom III and Half Life 2 are the biggest two. Far Cry is another one.
I agree there will be some upgrades coming in Q1-Q2 for many gamers. That is good for a few million mid to high end systems. A lot of people may only upgrade video cards though. Half Life 2 and Far Cry are two games that will have optimizations for A64, so that may bode well for AMD.
Intel surpassed AMD in number of patent received in 2003
My theory is that when Intel discovered AMD surpassing them in patents many years back, they decided to step up their patent efforts to reacquire the lead. In a company like this, there are many patents that never get written simply because it isn't worth the time of writing them up, even though they could be granted. So Intel probably told their employees to write more patents, and they did. I don't think this represents a surge of Intel intellectual property, just an increase in filed intellectual property.
There is usually about a 3-4 year delay (sometimes more) from the time of writing new patents to the time they are actually granted, so this would correspond to my theory.
Also - I'm guessing that Intel has always had more quality patents then AMD. AMD is probably filing every last little thing they can imagine, including those that are worthless. Now Intel may be following suit, just to take away AMD's bragging rights.
Just a possibility.
Anandtech redeemed - 3400+ Part2 review
Wow - AMD parts look incredibly strong in that review.
I think Prescott will be facing some stiff competition. It has been rumored Prescott won't perform better than an equivalent grade P4EE, and the P4EE is losing in most of the marks here to FX51 and in some cases to the 3400+. If you take this bit of information and combine it with the promise of socket 939, AMD really looks like it will have no problem having a product in all the desktop segments this year.
While I try not to get into the performance debate that occurs on these boards, I think it is important for AMD as a company to maintain parity or leadership in performance so they can control their own prices somewhat. This makes this battle relevant to my AMD investment.
I'm not an AMDroid, AMDolt, or whatever you call it these days. I'm just an AMD investor. If Intel had a part that performed best and had the best price/performance for what I want to do, I would not hesitate to buy one, and I would likely rethink my AMD investment. If AMD loses control over pricing by not having parts in the top speed categories, they'll be right back to losing money in the chip division (in Q3 it made a profit, and I assume Q4 is profitable).
I realize that Prescott is not out yet, and I reserve the right to change my mind and investment strategy at any time, but for now AMD looks to be the better play for 2004.
FX-53 will be released twice, even if it sounds stupid.
Since the 939 FX-53 would perform better than the 940 FX-53, wouldn't they just release it as a new model (say FX-54 or FX-55)?
I think this socket transition is hurting AMD. 939 should have been there at launch (of desktop parts). I know I don't have any desire to buy an A64 in any form right now, mainly because of the platform. I probably would have been an early adopter if it wasn't for this.
Perhaps after 939 intro, A64 will really take off.
which months do you guys think is the best time to play AMD option calls
Save yourself some pain, and just buy some shares. AMD can be highly unpredictable except for the prediction that it goes up and down a lot.
If I didn't have a position and I wanted to buy call options, I would probably do it now, and I would buy February or April contracts. We'll probably have a run up into earnings, a dip after, and then another run after things settle out. That is the usual pattern.
My point is that the power states are not completely software controlled
My Powernow equiped laptop lets me put the processor in a low power state. I can't select an intermediate state though. I can select low power (lowest voltage/frequency), auto (automatic voltage/frequency), or performance (highest voltage/frequency).
What is preventing AMD from implementing a way to select intermediate states for their processors? Why is that not possible? Certainly the processor is spec-ed to run at these intermediate states because it often hits them in auto mode.
What am I missing?
I don't know how many of you use miniDV cameras, but a 5 minute uncompressed capture is about 1 gig. Sure I can compress this to MPEG2 or MPEG4 before editing, but editing can be a bit of a pain in these compressed formats. Raw editing is easier and better for when you are making multiple output files of different compression types. Fortunately most of my clips are only a couple of minutes long, but I know I could use >4G of memory to make editing go much, much faster (I have 1G in my machine now). At current prices I'm not willing to pay for 4G of memory though. When memory prices come down, 64 bit computing will find many uses among mass consumers. Unfortunately it seems that might still be a ways off. Power users will jump on it though.
JMHO-
Keep in mind that the volume crossover for K8 over K7 is scheduled for late Q2. The mix changes drastically, starting now.
Hey I would love to see an ASP of $100 as the stock will probably reach the 50s and I have lots of stock, but I just think that road will be long and hard. I think we will see gradual increases in ASP over the next year (maybe $3-$4 per quarter), and not a drastic change. If flash continues to recover, AMD could still be looking at $.50 profit per quarter even with these modest gains in ASP.
I still think AMD is a better trading stock (the hype will make it run far beyond the fundamentals), although a long term investment at this point would probably do pretty well.
I both trade and have a long term investment in AMD. I've held some shares since January 02. I have some trading shares I'm going to try to exit from sometime in Q1. I'm still hoping for $20+ on these. I'll then write more puts in the summer when AMD typically trades down. I'll probably hold my long term shares until Q4 04.
that $100 ASP is a pretty reasonable goal.
An ASP of $100 would be an increase of about $30. That would add $30x7M = $210M to the bottom line per quarter. That is nearly $.60/share per quarter!
I doubt we'll see $100 ASP anytime soon unless there is a major chip shortage affecting both Intel and AMD. Remember AMD is still selling 5-6 million regular Athlons at $70 or less even in Q4. These customers are going to want replacement bargain parts, not the expensive Athlon 64s and FXs. AMD is going to have to have a bargain Athlon 64 part that sells for less than $100 or keep on continuing the regular Athlons. I don't think they can change their market overnight. Maybe in a couple of years they can be the high end player and leave the bargain areas to Intel, but I don't really expect that to happen.
but I think these rumors speak more to what has happened rather than what WILL happen
If these rumors pan out to be true, AMD will gain a little extra momentum in the marketplace in Q1 and Q2. Intel can certainly recover (they probably already have the problems fixed internally), so I see this as more positive for AMD than negative for Intel. AMD still has a lot to worry about the long term (Intel will likely be in the performance lead again, 90nm transition, etc.), but short term things are looking good, so I'll continue to hold my shares.
AMD investors are an unusual bunch. They sometimes weigh short term outlook more than long term outlook, as can be witnessed by the high volatility.
I also agree with Elmer that yb should have posted his source from the start to help us weigh the information appropriately. Without a source, it was useless. Now it is only slightly less useless now that we know the source, but I thank yb for posting it anyway.
Elmer-
While I agree with you on waiting for real facts, rumors can be good for alerting us to potential pitfalls and opportunities for investments. While I would not invest directly on these rumors, I may come up with a strategy to profit from it if the rumor becomes more than rumor. This is an advantage, so I welcome any information no matter how poor the source. I'll weigh it accordingly.
I have to admit, rumors like this make me more comfortable holding AMD shares long. I don't feel quite as anxious to sell. I'm more willing to see how things play out.
General question: Would you invest the same way after you made a fortune as before you made it?
Yes I would invest the same way. I've already made a fortune, and I continue to do the occasional long shot gamble with calls. I don't 'need' to do this, but why shouldn't I? Why would I change the strategy that got me here? My overall strategy is write puts on stocks I like, generally keep cash, keep any assignments for long term gains if I like the stock enough and I'm not overweight on it, and occasionally play the long shot when I feel there is a good chance of a run up.
This time I tried to play 2 longs shots back to back, which was a mistake. I knew better at the time, but I said what the hell, and rolled all the profit into more aggressive calls. Next time I'll be more conservative in the roll forward. I'm still capable of recognizing and learning from mistakes. If by some miracle these Jan 19 calls pay off, I will recognize that as luck and not a wise decision.
Now I will change my strategy to be much more conservative when I retire, but in the meantime, I might as well stick to this higher risk/higher gains game.
Well at least you guys aren't holding a boatload of Jan 19 calls long. Fortunately these were purchased entirely from previous profits on Jan 15s, so nothing lost overall, but damn it sure feels like a loss since I turned a 200% gain into dust. I should have been less aggressive and only used some of the profits, but that was the gamble I took. It could have paid off nicely.
Other than that I am very long shares, and I plan on selling some before earnings if we have a run up (just to lighten up - I'm overbought). My average entry is $11, but that doesn't include all the months that I kept cash from put writes that I was not assigned. If you counted that, my entry price is lower ($8 maybe).
Upgrade
Sanford Bernstein ups AMD's estimates, price target (AMD) By Tomi Kilgore
NEW YORK (CBS.MW) - Analyst Adam Parker at Sanford Bernstein believe Advanced Micro Devices' fourth quarter is "tracking above consensus expectations" due to strength in both the chipmaker's PC processor and flash memory businesses. He now expects the company to earn 7 cents a share on revenue of $1.12 billion, vs. his prior projections of a penny a share and $1.08 billion, respectively. Looking ahead, Parker upped his 2004 earnings forecast to 40 cents a share from 22 cents, citing expectations that AMD will drive out costs in its flash memory business and benefit from increasing average selling prices in its processor business. As a result, he upped his stock price target to $16 from $14. The stock rallied 30 cents to $15 in pre-open trading.
http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?siteid=mktw&dateid=37984.3729166667-8108...
Where are you guys seeing that the earnings announcement is after options expiration? The schedule I saw was for earnings on the 15th. Last day of trading before expiration is the 16th.
AMD does not appear to have officially set the earnings announcement date...unless I am missing something.
It would be highly unusual for earnings to come a week later.
I'll admit I'm long some Jan call options, but I have long since written them off as a loss (I might even sell them this week for whatever I can get), so it isn't a huge deal to me unless I decide to make another play.
All of the parts (2.8, 3.0 and 3.2) have the 'E' in
the 'frequency'. What's up with that? Are they doing an
AMD and now using an 'extreme' gigahertz nomenclature?
If I had to guess, it is still 2.8, 3.0, 3.2 Ghz and this is Intel's way of showing the 2.8Ghz on Prescott is better than 2.8Ghz on P4. If they don't distinguish this in some way, the clueless consumers will assume they are of comparable performance. In the past Intel avoided this by not having so much overlap of frequencies, but it appears they are in a small bind this time and they don't want Prescott to be devalued.
Thanks for you updates. I find them informative.
Anyone think tomorrow is going to be a bad day for the markets? This increased terror alert will probably have things on edge. AMD is on technically weak footing, so I expect it will be a leader down if the markets are sour.
This does not make me happy as I was hoping to write some covered calls on my newly assigned shares.
Sigh. Maybe I'll just take a holiday from watching the markets and return after New Year's. Things should look up by then.
You must have read my mind. My last post was of similar thought.
I'm surprised by today's low volume and small trading range. Very odd for options expiration. We should have been seeing more activity from the option exercisers. This flat activity indicates they are holding their newly acquired long (call exercise) and short (put exercise) positions instead of trading them away. Perhaps monday will have a flood of volume from over the weekend exercises. If all the exercisers immediately closed their new positions and no other factors were at work on the stock, the stock would trend towards max pain (imbalance of buyers/sellers), but this did not happen. As it sits today for Dec options, there are in the money put options covering over 4 million shares, and in the money call options covering only .5 million shares. This is a pretty significant imbalance.
Nice work. I assume these are the short calls you are referring to. Wish I could say the same for this month. I guess that is what sometimes happens when you only play one side.
You made some smart moves with the put rolls, but I'm not sure I would want to be short puts all the way out to April. That is what you rolled to right?. A lot can happen in that time. I like to limit my exposure to a month at a time.
I'm kicking myself for not closing these puts when AMD was at $15.50, like my own rule told me to do. Looks like I'll be riding the nervous train for a little while holding these 'extra' shares. I may write Jan 16 calls on these shares on monday if I can get $.45 or better. That would put me back in the positive on these shares by $.20 assuming they are called away. I may also decide to be greedy and hold for a little while until another run up happens, and then write some calls. Hmmm....how much risk do I want to take here...
I expect the stock to close somewhere between 14 and 16 today
Today is options expiration and max pain is about $15.40. I think it is going to zero in on $15 by close. Monday should be interesting too, but after that I don't expect much action until after New Years, at which point I believe it will make another run.
So, 4 HT threads would not require twice as much register space.
That is correct, but they would require a whole bunch of other things be duplicated or partitioned. The instruction TLB, reorder buffers, various queues, etc.
I think a 4 way HT core would be too complex for too little gain. I doubt we'll see this from either Intel or AMD. AMD seems to even say they are not going to do a HT core at all in favor of multiple cores. It may be for AMD's microarchitecture the benefits of HT are very small. Higher IPC cores will be able to utilize HT less. Long pipeline cores with lower IPC like P4, however, have more waste in the execution units that the 2nd thread can use.
That gives a total of 52 GPRs (36 rename + 16 architected).
BTW - I think this figure is wrong. I don't have copies of MPR handy to look at. Can you double check what it says (or did you already do that)?
Instructions in flight is listed as 72 for Opteron, which implies more rename registers than you quote.
I'm sure you have more knowledge in this area than me (I'm more software-ish), so I will concede to your expertise here. I keep up with this area because software/hardware face similar problems in optimization and tradeoffs.
I never figured out why HT requires two completely separate register pools
HT doesn't require 2 (microarchitecture) register pools. It shares these lowest level registers. Each thread has its own mapping table of logical register to these registers.
Some special registers have to be duplicated though because they have specific purposes per thread.
Petz, I'm 99% sure that Intel variant of 64 bit P4 will not be AMD64 compatible. Why should they? They can afford not to be.
Microsoft. It all comes down to them. If Microsoft had agreed behind closed doors long ago to support another instruction set, then that is what Intel would have done. Rumors say Microsoft told Intel they wouldn't support an additional instruction set. Sure Intel can whip up Linux support very easily, but MSFT still holds a lot of cards. Does anyone think a new instruction set would fly without MSFT support? We may all hate MSFT, but the reality for now is they have the biggest OS market share.
Intel also probably believes they can outdo AMD on their x86-64 implementation in the long run, and over time (5 years down the road), people will probably believe x86-64 was an Intel creation if Intel manages to stay ahead in market share and performance. They can also play off the momentum x86-64 has already built (OS, drivers, etc.), and have a product to market sooner.
Everybody, please stop using this number, it is utter BS.
I don't know why you are replying to me with a quote I didn't make. I never claimed 400. I just illustrated the concept of out of order execution.
P4 is 128 GPRs (integer), right?
I guess this means that current generation processors still push all the registers for a thread context shift. Too bad.
You may not realize what you are saying, but Hyperthreading is built on what you are describing. It allows 2 threads to have complete state on the processor without having to do a context dump to memory when switching. P4 hyperthreading is reusing the OoO (a.k.a microarchitecture) registers for this feature so you can get instruction level parallelism between 2 threads in this manner.
You can see for yourself how much Hyperthreading buys by looking at various reviews. In some cases it is very good to have this, but overall is not a huge win. Same thread out of order execution is a much bigger thing.
I would think the 400 hidden registers are used for context shifts between threads.
You are thinking too high up with the context shifts. OoO registers are for instruction level scheduling level that is much lower level.
Say an instruction comes in and wants to write to register R1 and read from register R2 and a memory location. Now say a 2nd sequential instruction comes in and wants to write to R3 and read from R1 and R2. This 2nd instruction depends on the 1st, so it must wait for it.
Now say a 3rd sequential instruction comes in that also wants to write to R1 and reads from register R4 and R5. There is no interdependency between the 1st and 2nd instructions and this 3rd instruction, yet this 3rd instruction must wait for the 1st instruction to complete before writing to R1 when no OoO registers are available. With an OoO register the processor can execute this 3rd instruction without waiting for the 1st instruction to complete its write to R1. It maps the logical R1 register name to another OoO register for this 3rd instruction. Any instructions that come after this 3rd instruction that use R1 will use the mapped register (Note the first R1 write from instruction 1 was mapped to a physical register too).
This was a simple example, but should give you and idea of the usage of OoO registers. In reality the compiler would have likely caught the dependency above and used different registers to write to, but if you get into highly dynamic sequences (branches with many possible execution paths) only instruction level scheduling will work well, which is why OoO is so important still even with advances in compilers.
I see your strategy as bearish.
I was referring to taking the put assignment instead of rolling, and then waiting for it to go up enough so that I can write calls to get rid of these extra shares I should not have (I have too many already). This would be the best path if I was short term bullish.
But instead, I have to say a put roll is enticing me right now because it is less risky. If I take assignment, my entry price would be $16.25. If I instead roll, I could end up with one of the following entry prices:
Jan 14 - $15.10
Jan 15 - $15.55
Jan 16 - $15.85
Jan 17.5 - $16.10
Note that I have to write 16s and up to have more cash in my pocket than I started with ($.15 for the 16s, and $1.40 for the 17.5s). I think I would be willing to take the small loss in cash at this point for a lower entry price. I'm going to probably do the Jan 15 roll. I would end up being out $.55 per share in cash. This is considered a wash sale (the Jan 15s are in the money), so the loss I take today doesn't apply until I close the Jan contracts.
Just thinking out loud. Perhaps others will benefit from seeing how a put roll can lower your entry price.
I'll be taking my assignment this weekend. I'm short Nov 17 puts. This will increase my overall AMD stock holdings a decent amount, bringing my average purchase price up to around $11. I don't feel the overall profit is in jeopardy yet, but I am taking a risk here. I guess I could just say if it hits $12, I'll get out and protect a measly 9% return overall.
I still believe January will be a strong month for AMD and the markets in general, so my paper losses will likely be short lived. I'll start writing one month out $17 or $17.50 calls on these assigned shares when I can get a decent amount for them (more than $.40). I would rather take this approach than roll the puts for a loss, but I guess I am more bullish than you Elmer.
eMachines Introduces 64-Bit PC for Gaming and Other Multimedia Applications
Kind of strange to see this announcement today. I saw this model on the shelf at Best Buy this weekend.
With 90nm perhaps a year away it's not looking good for AMD.
What are you basing this on? Past history? Fair enough, but AMD's upper management is vastly different than a few years ago. Jerry would have lied and denied, but Hector seems completely different. They already confessed to a delay (from Q1 to late Q2/early Q3). I certainly don't blame you for your skepticism, but I'm going to give Hector the benefit of the doubt. If Jerry was still in charge, I would be even more skeptical than you (in fact I would not be invested in AMD at this point), but Hector hasn't done anything yet to make me distrust him. I will feel better if they make further comments in the Q4 earnings conference call on 90nm. If there are any major signs of trouble, I'll be heading for the door.
My 2 worries for my AMD investments to this point were 90nm transition and Prescott. As for Prescott, I was originally expecting 3.6Ghz and increased IPC at launch in Q4 this year with no competition from AMD at the top. With the launch delay, and rumors of lower speed grades, that is looking like less of a threat. I'm sure Prescott at 3.2Ghz will perform very well and probably best in some categories, but it won't be the blowout I was expecting. I'm now anticipating AMD and Intel will be eye to eye in the high end PC market for all of 04. Intel will still have the mobile advantage, and AMD probably gets the nod in volume servers. This makes AMD a safer long term investment than I originally surmised, so I may hold on longer than I planned, or at the very least buy some leaps after selling my shares. It is pretty much in their own hands now to just make the 90nm transition smooth. That does still scare me a bit I must say. It is still too early to say it isn't looking good though unless you have an inside track. Do you know something we don't?
I was in Best Buy this weekend and it was a zoo, but the bad news is the PC aisle was pretty dead. They did have on display the Emachines T6000 A64 machine. Very nice looking, and I couldn't believe the price ($1299). Actually this was one of the most expensive desktops they had.
Also in the notebook aisle there was a guy who was trying to buy an Emachines laptop with an AMD part in it. I forget the model, but it was the widescreen one. Unfortunately they were completely sold out (sort of good news for AMD) including the display model, but the bad news is the guy said, 'well just give me this widescreen Centrino based one instead'.
Japan is bouncing in the +2.5-2.7% range. I bet US market will do at least that.
This might just trigger a Santa rally. I don't know about you, but people around me suddenly seem to be more in the Christmas spirit. Maybe that will translate into spending more money.
I got news for you AMD has not been making a profit selling CPU's for about a year
I guess you failed to look at AMD's Q3 earnings in any detail. CPG (the group that makes CPU's) made a profit of $19 million. That was in a quarter where A64 has no impact and Opterons still had very little (less than $5 million IMO). So they were even making money on mostly Athlon's selling for an ASP of $70. Even if it costs 2 times as much to make an A64 or Opteron, they are selling these for a much higher price, so they would still be making money on them.
Something to consider -
ASPs traditionally rise in Q4 and demand is up too so units should be up. Combine this with AMD shipping a higher ASP product than ever before in their history (A64 and Opteron), and my guess is an additional $100 million in profit from CPG alone in Q4. Add in the flash pickup, and AMD is likely to make north of $.20/share this quarter, possibly much greater.
I did a search on the amd website and came up with this:
http://www.amd.com/us-en/Corporate/VirtualPressRoom/0,,51_104_543_8001~22422,00.html
It looks like Dirk is on the fast track:
1996 - came on as Director of Engineering for Athlon
1999 - promoted to VP of Engineering for CPG
2001 - promoted to Group VP and General Manager of CPG
2002 - promoted to Senior VP and officer
I don't think he could get promoted again without becoming CEO.
Um, looks like your continuing trends are somewhat at odds with one another. Which trend will continue?
The weekly is the strongest by nature, so it will likely win out. So we are in a short term downtrend, but if you are investing long term, you should take comfort in the fact that on a weekly basis, the stock will 'likely' continue upwards. They keyword is 'likely'. TA tells you nothing about what is going to happen, just what is more likely in the absence of fundamental changes. TA can also point out where a reversal in momentum is likely, although that is more of a guessing game (a 60/40 kind of bet).
I agree analysis can be way overdone, but I don't see any harm in pointing out trends. Momentum is your friend. Fundamentals are always more important.
I always consider fundamentals first in making a trade, and look at momentum second. For instance, the momentum told me to sell everything when AMD crossed $15.50 last week, but I overruled this because I believe in the fundamentals, and my time horizon is longer than a couple of weeks (the weekly momentum is still up). I could have made an exit and reentry and skimmed a few dollars, but it wasn't worth the risk of the unlikely happening.