Unusual Options Activity: Advanced Micro Devices (AMD)

Shares of chipmaking firm Advanced Micro Devices (AMD) have been rangebound between $75 and $85 over the past few months. One trader sees a bigger move higher in the coming weeks.

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  • That’s based on the July 30 $95 calls. With 43 days until expiration, over 5,170 contracts traded against a prior open interest of 252, for a 21-fold rise in volume. The buyer of the calls paid $0.54.

    With shares last around $80, a rise of nearly 20 percent would be required to send the option trading in-the-money. That would also leave shares near their 52-week high of $99 per share.

    The company is set to report earnings in late July, but that won’t leave much of an opportunity for this option to profit.

    Shares are hardly inexpensive at 34 times earnings, but with other tech names starting to rise in recent weeks, it’s possible that shares break out of their funk and start heading higher.

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  • Action to take: As the company doesn’t pay a dividend, there’s no reason to make the trade on an expected move higher by buying shares.

    The July $95 calls are aggressive, but inexpensive. If shares see a quick move higher, traders could book a high-double or low-triple-digit profit. That wouldn’t require shares to move in-the-money, and could lead to a trader back to cash in just a few weeks.


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

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