Unusual Options Activity: Advanced Micro Devices (AMD)

Shares of semiconductor firm Advanced Micro Devices (AMD) have seen a strong rally in the past few weeks. One trader sees that trend continuing through the end of the month.

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  • That’s based on the July 30 $110 calls. With 28 days until expiration, over 7,190 contracts traded against an open interest of 268, for a 27-fold jump in volume. The buyer of the calls paid $1.04 to make the trade.

    With shares around $94, they’d need to rise $16 or about 20 percent in order for the options to close in-the-money at expiration. Given that the company is in an uptrend. It also reports earnings right before expiration, so such a move in-the-money might be possible.

    Shares are up 70 percent in the past year, as revenues have jumped 93 percent and earnings have rallied 242 percent. The buyer of these bullish calls likely expects the move to continue, and for shares to break over their old high of $99 per share.

    Action to take: With a substantial move higher in shares in recent weeks, it appears increasingly likely that a new wave higher in tech stocks is happening. That makes the option a worthwhile buy. It has little time to play out, so traders might want to hold until it looks like the current rally underway is breaking.

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  • Given the company’s growth and likely growth prospects, shares are still fairly attractive here, but don’t pay a dividend.


    Disclosure: The author of this article has no position in the company mentioned here, but may make a trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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