To The Moon

Global semiconductor giants$Advanced Micro Corporation (AMD) $It will release its second quarter 2025 earnings report on August 5th after hours. The market's focus is mainly focused on four major themes: the impact of the performance after the MI308 ban is lifted, the full-year AI revenue guidance, the recovery trend of the FPGA business, and whether the PC business profit margin can surpass Intel.

Core Financial Indicators

• The market consensus forecast for revenue is US $7.43 billion, a year-on-year increase of 27% and flat month-on-month; AMD's previous revenue guidance was US $7.4 billion, a year-on-year increase of 27% and a slight month-on-month decline.

• Non-GAAP gross profit margin was previously guided to be 43%, a year-on-year decrease of 6.1 percentage points and a month-on-month decrease of 7.2 percentage points, mainly due to the impact of the expenses accrued for the previous lock-up of MI308; If this impact is excluded, the Non-GAAP gross profit margin is 54%, a year-on-year increase of 0.9 percentage points and a month-on-month increase of 0.3 percentage points.

• The consensus estimate for generally accepted accounting principles (GAAP) earnings per share (EPS) is-$0.047, turning from profit to loss year-on-year; Non-GAAP EPS was previously guided for US $0.47, corresponding to net profit of US $760 million, a year-on-year decrease of 32%; If the impact related to MI308 is excluded, Non-GAAP EPS is US $0.9, corresponding to net profit of US $1.47 billion, a year-on-year increase of 31%.

In the past two years, AMD has given specific guidance on data center GPU revenue in 2024 quarter by quarter: from "more than 2 billion US dollars" in the third quarter of 2023, it has been raised all the way to 5 billion US dollars in the fourth quarter of 2024, and in Each quarter of 2024 will be raised by US $500 million. However, in the financial report for the first quarter of 2025, AMD did not clearly give guidance for data center GPU revenue for the whole year of 2025, but only vaguely stated that "revenue achieved high double-digit growth year-on-year", and emphasized that "the first half of the year was basically flat year-on-year. Growth mainly relies on the heavy volume of the MI350 series in the second half of the year."

The market expects AMD management to provide specific guidance on full-year AI revenue to enhance investor confidence. In view of the upcoming AMD earnings report, investors can use the wide straddle strategy to trade.

How has the stock price performed on previous earnings days?

Currently, the options market is pricing in the violent price fluctuations after AMD's financial report is announced, and its extremely high implied volatility (IV percentile reaches 85%) confirms this point. At the same time, based on the put/call ratio of 0.64, the market sentiment is clearly biased towards positive (bullish) rather than neutral or negative.

Judging from the fluctuation of performance expectations, the current market expects the post-financial report band range to be ± 8. 33%.

What is the wide straddle strategy

In long wide straddle options, investors buy both out-of-the-money call options and out-of-the-money put options. The strike price of a call option is higher than the current market price of the underlying asset, while the strike price of a put option is lower than the market price of the underlying asset. This strategy has significant profit potential because the call option theoretically has unlimited upside if the price of the underlying asset rises, while the put option can make a profit if the price of the underlying asset falls. The risk of the trade is limited to the premium paid for these two options.

An investor shorting a wide straddle sells an out-of-the-money put and an out-of-the-money call at the same time. This approach is a neutral strategy with limited profit potential. Shorting a wide straddle option is profitable when the underlying stock price is trading within a narrow range between break-even points. The maximum profit is equal to the premium obtained by selling two options minus the transaction cost.

AMD short-selling wide straddle strategy case

AMD is currently trading at $176.78. Investors can implement the short wide straddle strategy by:

Sell a call option with a strike price of $200, and premium is $113.

Sell a put option with a strike price of $160, and premium is $135.

Investors sell a call option with a strike price of $200 and charge $113 from premium, while selling a put option with a strike price of $160 and charging $135 from premium. Gross revenue was $248.

• Maximum profit: When AMD's stock price is between $160 and $200 at expiration, neither option is exercised, and investors retain all premium. The maximum profit is $248.

• Break-even point：

  • Below: 160-2.48 =$157.52

  • Above: 200 + 2.48 =$202.48

• Maximum loss：

  • If the stock price falls sharply to approach 0, the maximum loss is about 160-0-2.48 =$157.52/Share

  • If the stock price rises sharply to much higher than 200, the maximum loss is about ∞-200-2.48, the theory is unlimited, but the loss starts from 202.48

This strategy is suitable for judging that the target can make a profit when it remains in the range of 160 to 200 before expiration and the volatility shrinks. Once it rises or falls sharply, the risk of loss is significant. Strict risk control is required.