AMD’s stock jumped 37% in early October after a new partnership with OpenAI on GPU supply. On October 6, 2025, the companies signed a multi-year deal. OpenAI promised to use up to 6 gigawatts of AMD Instinct GPUs. In exchange, AMD gave OpenAI warrants for 160 million shares, depending on hitting supply and share price targets. AMD believes this agreement could bring in significant revenue and attract new customers. The market’s positive reaction indicates that AMD is now viewed as a real competitor to Nvidia in the AI GPU market. This change reflects OpenAI’s role in shaping AMD’s future, not just in buying chips. However, excitement won’t last without proof of strong revenue from this deal. Key to success will be AMD’s ability to sell MI300X shipments and keep profit margins high. There’s also room for AMD to partner with companies like Meta, Google, AWS, or Oracle, although these opportunities aren’t included in the current stock price. With OpenAI’s GPU shipments planned for late 2026 and no immediate milestones met, AMD needs to focus on executing the plan and securing more partnerships for ongoing growth. Until then, stock performance may stabilize until new updates create further movement. After the 37% surge, implied volatility in AMD options has soared, with 30-day IV likely rising above 80% this week. This hike in volatility makes buying options very expensive, and we think the straightforward profits from this news have already been made. The market has reflected the announcement of the deal, but execution is still over a year away. With a “quiet zone” expected until 2026 with no major catalysts, selling option premiums appears attractive. Strategies like iron condors or credit spreads could be profitable if AMD’s stock stabilizes or moves sideways in the coming weeks. The high volatility means the premiums collected now are hefty, providing a strong safety net. We are closely monitoring the resistance from March 2024 since the recent jump may have created a double top on the charts. For those interested in hedging or speculating on a pullback, buying expensive puts is not recommended. Instead, consider using put debit spreads. This strategy caps risk and significantly reduces entry costs. This situation is similar to Nvidia’s stock in 2023, where large rallies based on forecasts were followed by months of consolidation before the next rise. Historical trends show that after an initial spike of over 30%, a stock usually enters a digestion phase. We need to see tangible revenue results before justifying another big increase. If another deal with a major player like Meta or Google emerges, it could provide a new advantage that isn’t currently reflected in the price. Traders expecting this should explore longer-dated call spreads with expirations targeting mid-2026. This approach allows time for developments while managing the high costs of short-term options.

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