Unusual Options Activity: Advanced Micro Devices (AMD)

Shares of semiconductor company Advanced Micro Devices (AMD) surged to new all-time highs following earnings this week one trader sees shares potentially moving even higher.

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  • That’s based on the November $85 calls. With 112 days until expiration, over 12,580 contracts traded against a prior open interest of 736, for a 17-fold rise in volume. The buyer of the calls paid about $16.15 to make the trade.

    With shares around $98 following their earnings bump, the option is about $13 in-the-money, leaving about $3 in time premium.

    Even with the recent surge higher, shares are only up about 17 percent in the past year, lagging the S&P 500 by nearly 20 points. That’s in spite of a near-doubling of revenue and earnings up 350 percent.

    Action to take: The company’s strong earnings and performance over the past year make this a company that any investor may still want to consider going forward. However, shares don’t pay a dividend yet.

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  • In the shorter-term, shares are in an uptrend, which looks likely to continue. The November $85 calls are interesting, as they’ll likely keep most of their value even if shares don’t continue to rally. For traders willing to take on a bigger risk for a bigger reward, look at an out-of-the-money call option like one with a $100 strike price.

     

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

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