Pairs trade INTC/AMD

Discussion in 'Stocks' started by DeltaSpread, Dec 27, 2006.

  1. I am really getting tired of hearing from a couple friends how successful they were this past year in pairs. I feel like a loser for not even considering this strategy.

    Anyone have any interest in an INTC/AMD pair?

    Both have same PE's & share prices are pretty close as well, so you wouldn't need any rocket science style balancing calculations.

    What I am specifically interested in is any technical feedback with respect to working out the volatility or beta on each stock, and logistically marrying up the positions.
  2. hels02


    Well... the theory behind pairs trading is that you are buying 2 VERY SIMILAR stocks in the same industry. Like KO or PEP ... or HD and LOW. Long one short other.

    The problem with these 2 is that while they're technically a pair, because of the direct competition and lack thereof, I'm not convinced that they move up and down together like other pairs. If you do a chart overlay... you see that they can move almost opposite each other (not parallel, crossing over, like one's going up while the other's going down).

    While I would never put all, or a lot, of eggs in 1 basket, in this case, I'm not sure it's a good thing having both baskets. If nasdaq tanks, you have 2 exposed positions. Of course, if it keeps going up, then you have 2 up positions. But in that case, wouldn't it be better to have 2 of the one you think will do better:)?

    If you're worried about the downside, and there can be, buy a put with your stock.
  3. Even tho AMD has gain ground on INTC (AMD opens INTC closes factories) AMD (Witch i own) after the jump has been going nothing but down. I think next year by the luanch of Vista both AMD and INTC should jump. If not i will have to pull out. I will stay in them atleast until May, i'm really getting hurt byut
  4. Double post.
  5. hels02


    Have patience, this is necessarily a long term investment. If you need to recoup $$ on it, you could sell calls against your stock.

    There's more going on right now ... AMD sued Intel last year for monopolistic practices. This has adversely affected both stocks. Old news.

    The breaking news today is that Federal District Court has announced a significant victory for AMD (I can't find an article on this yet, only streaming news that broke at 1:30pm today).

    "It overruled Intel's objections and ordered it to produce documents and other evidence bearing on Intel's exclusionary conduct outside US borders.

    AMD believes that the production of this foreign discovery will contain evidence of anticompetitive business practices that show clear violations of not only the Sherman Antitrust Act but also generally accepted anti-monopoly laws worldwide."

    Follow this lawsuit on AMD's site:

    Keep in mind that AMD and Intel have the entire world's PC processor's locked up between them.

    While this battle of the titan's continues, it's going to hurt stock prices, and a lot of people wait on the sidelines to see the outcome. In the meantime, both keep on making money.

    If AMD wins this suit, or ongoing parts of it, take a wild guess what's going to happen to their stock prices.
  6. hels02


    Well, together they are a monopoly:p. Who else makes PC chips? With the entire world an emerging market, what's the one thing that developed nations buy lots and lots of? PC's?

    It's becoming a global economy. Keeping track of news and the new instant communication is no longer a luxury, it's a necessity, and it's easiest with a computer and the internet.

    Between Intel and AMD, how much of the worldwide market do they control? Nearly all of it? Realistically speaking, do you see anyone stepping in to compete with them?

    I still think that THIS YEAR AMD will move up. That doesn't mean it will. I'm still holding my AMD, and making money on it when I can with options... frankly, I don't want to pay taxes on every bit of it since I got all my AMD free in a split.

    So it doesn't make one bit of difference to me what it does, so long as they don't go bankrupt, for me, every cent of what I own of it is pure profit. And no one with a brain thinks AMD is close to bankruptcy.

    I still think it's a good stock. If someone wants to short it to death, it will just explode that much harder later. If you are buying it for momentum.... it's not been very volatile lately. But if you're a long term buy holder, take a look at the chart, it's pretty low right now, and it owns ATI. What would be your next graphics card purchase options?
  7. Neet


    What do you guys mean by pair trades, buying both ? If so, I don't get it, if the semis do like crap these tank as well.

    Don't see the reasoning behind this really.
  8. Buy one, sell the other.
  9. Neet


    How are these pair trades conducted, based on which indications ?

    Thank you for any clarification.
    #10     Dec 29, 2006