The post-earnings drubbing in Advanced Micro Devices, Inc. (NASDAQ:AMD) has opportunity written all over it. We’ve seen numerous such sell-offs in AMD stock during its meteoric ascent in recent years, and each one eventually delivered gains to the brave souls willing to step-up and buy the dip.

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Semiconductor stocks are all the rage these days. Momentum lovers are feasting on profits in the space due to its consistent uptrend and actionable volatility.

For a birds’ eye view of the sector, look no further than the Vaneck Vectors Semiconductor ETF (MUTF:SMH), which is now a stone’s throw away from its all-time high set in the final throes of the dot-com era.

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While there will undoubtedly be winners and losers in the space, the widespread optimism will bring buyers into AMD stock at some point. The earnings miss that sparked the drawdown obviously justified some type of haircut for the stock. The tricky question is how much. At $11, we’ve now seen a 23% drop in Advanced Micro Devices since it dared to disappoint the Street. A 30% drop would carry shares to $10.05.

Click to Enlarge Source: OptionsAnalytix

It’s worth noting the $10-level has been significant this year as it has marked the lower-end of AMD’s price range. Perhaps this time is different, but it certainly seems like a logical spot to consider dipping our toes into the water.

And here’s the beautiful thing: The options market will pay you for your willingness to get involved at that spot.

Sell AMD Naked Puts

The strategy, of course, is a naked put. By selling a put, you get paid for obligating yourself to buy AMD stock at a discount. Sell the Dec $10 put for 28 cents or better. If Advanced Micro Devices sits above $10, you’ll pocket the 28 cents at expiration. While that may not sound like a lot, the margin requirement for entering the trade is only $120. That means the potential return on initial investment is a mouth-watering 25% return.

And if AMD falls below $10, you’ll have to buy it at an effective purchase price of $9.75. Sounds like a win-win, no?

As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want to learn how to master the art of option selling for high-probability cash flow? Check out Tyler’s recently released video series through Tackle Trading on how to systematically sell iron condors for monthly income.

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