Unusual Options Activity: Advanced Micro Devices (AMD)

Shares of semiconductor firm Advanced Micro Devices (AMD) have been in a strong uptrend, particularly after reporting its latest earnings numbers a few weeks ago. One trader sees the possibility for a further move.

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  • That’s based on the September 3 $119 call options. With 9 days until expiration, over 13,880 contracts traded against an open interest of 268, for a 52-fold jump in volume. The buyer of the contracts paid about $0.68 on average.

    With shares around $109, they’d need to rally about 9 percent for the trade to move in-the-money. However, shares were trading as high as $122 at the start of August before pulling back, and have bene moving higher in recent sessions.

    Action to take: Investors can still do well with shares. Even with the stock’s recent runup, shares have traded about in line with the S&P 500 over the past year. That’s even as revenue has risen by 99 percent and earnings are up 350 percent. While shares don’t pay a yield, there’s likely more upside ahead.

    These September 3 options are interesting, as they’re priced low enough to offer triple-digit profits. However, they also stand a high risk of expiring worthless, as shares may not move in-the-money before expiration.

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  • Traders may want to look at grabbing quick double-digit gains here, then using the profits to buy longer-dated call options to further profit from this strongly performing stock.


    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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