Unusual Options Activity: Advanced Micro Devices (AMD)

Semiconductor firm Advanced Micro Devices (AMD) has nearly doubled so far this year. One trader sees shares pulling back in the coming weeks.

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  • That’s based on the August 25 $115 puts. With 37 days until expiration, 11,158 contracts traded compared to a prior interest of 101, for a 101-fold rise in volume on the trade. The buyer of the puts paid $5.60 to make the bearish bet.

    AMD recently traded for about $118, so the stock would need to fall about 2.5 percent, or $3, for the option to move in-the-money. AMD shares have been trending down since hitting a 52-week high of $132.83 back in June.

    Despite the market’s interest in semiconductor companies for their AI potential, that isn’t reflected in AMD shares yet. Revenues dropped 9 percent over the past year, and the jump in share price has taken the stock to 41 times forward earnings.

    Action to take: Shares likely need a pause and small pullback after their big rally since the start of the year. A better entry point would be closer to $110, near the stock’s 50-day moving average.

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  • For traders, a short-term pullback looks likely. That could give the August 25 puts mid-double-digit returns in the span of just a few weeks. A big drop is likely at the end of July, when AMD next reports earnings.


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