(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Advanced Micro Devices (AMD) stock rose an astounding 550 percent since February 2016, versus an S&P 500 that has mounted a gain of nearly 33 percent. But since February 2017, shares of AMD have primarily traded sideways in an attempt to consolidate its vast gains over the past year.

An Investopedia article on October 18 noted that the stock could be nearing a technical breakout. (See more: AMD Nearing A Breakout - A Technical Analysis.) AMD shares may receive a significant boost when the chipmaker reports third-quarter results after the close of trading on October 24.

According to Wall Street consensus estimates, analysts expect third-quarter revenue to have risen by about 15 percent to $1.507 billion. Meanwhile, Advanced Micro's 3Q earnings are expected to have climbed by 150 percent to $0.08 a share, according to YCharts. Where the stock goes from its current price of around $14 will depend on the company's results and guidance for the fourth quarter.

AMD Chart

AMD data by YCharts

Options Pricing In Big Move

As of Friday, October 23, options were pricing in a rise or fall of roughly 12.5 percent based on a long straddle strategy set for expiration on November 17. The $14 strike price calls have a premium of $0.81, while the puts have a premium of $0.97. That means it would cost a trader $1.77 to buy both one put and one call, meaning the stock would need to trade below $12.23 or above $15.77 to be profitable.

The implied volatility is also extremely high, at 57.6 percent, nearly nine times greater than the S&P 500's implied volatility of 6.3 percent for the same length of time until expiration. The implied volatility at that rate suggests that a one standard deviation move in the stock could be as much as 15 percent. Between the long straddle and the implied volatility, there will be no shortage of excitement when Advanced Micro Devices reports its 3Q financial results.

Two Bullish Technical Indicators

The chart currently has two bullish formations in it. The first is a symmetrical triangle, and the second is an ascending triangle. The symmetrical triangle suggests that AMD shares could be set to rise over the short term.

A spike in shares above $14.25 would indicate a short-term breakout. Meanwhile, should the stock rise above $15.50, that would show a long-term breakout.

Fundamentals Finally Catching Up?

The fundamentals may finally be catching up with shares of AMD, and a strong showing from the company on October 24 would support that. Strong results and guidance will likely trigger a sharp rise in the stock, as the options markets are indicating, with high levels of expected volatility while provoking a technical breakout.

Be prepared for a big move either way.

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.

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