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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Magrathea who wrote (221858)	1/1/2007 9:38:02 AM
From: niceguy767	Read Replies (2) \| Respond to of 275872

Implied volatility is a function of the average short term view of the price of the underlying shares by current buyers and sellers. Additionally, the negative bias in AMD share price since its $42 days has everything to do with expected continuation in declining quarterly earnings, itself a function of declining profit margins. Just look at the correlation between profit margins as follows: Q4/05 = $852M, Q1/06 = $789M, Q2/06 = $690M and Q3 = $682M and the constant drift downward in share price from $42 to its current $20.39. Nothing to do with MM, nothing to do with options, everything to do with declining profit margin trend. If one believes in a significant improvement in AMD's CPU profit margin in Q4, from Q3's $682M, then anyone holding at the money callls might well reap the rewards of some huge and upward volatility.