No qualifying author-owned investment thesis was confirmed in this post.
The author is asking a question about a strategy rather than expressing their own directional investment judgment.
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TYPO: i wanted to say “overbought” in the post title!
Hello, fellow options traders.
I hope my post doesn't come across as too "simplistic" but CNBC recently reported that AMD is one of the most overbought semi stocks, with RSI of 89.1 (stocks with a 14-day RSI above 70 are considered overbought and below 30 as oversold).
Do you ever buy plain ATM puts (let's say with 6-12 month DTE) on such stocks just to ride out the eventual downward momentum and get out with a small profit, \~30%-ish or so?
I know that this could be said about any stocks because everything eventually pullbacks slightly, but stocks with such a high RSI are the best candidates for such somewhat lotto put plays, right?
PS. No need to downvote 🤭😉