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Option players from both sides of the aisle have taken a glass-half-full approach to Advanced Micro Devices, Inc. (NYSE:AMD) in recent weeks. For starters, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 19,428 calls during the last two weeks, compared to 2,874 puts. What's more, the resultant 10-day call/put volume ratio of 6.76 (up from its Aug. 1 reading of 2.83) ranks in the 73rd percentile of its annual range, pointing to a healthier-than-usual appetite for long calls over puts of late.
This trend has translated into a front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.37 for AMD, meaning near-the-money call open interest easily outweighs put open interest among options expiring on Sept. 20. Specifically, peak call open interest rests at the September 4 strike, where 26,599 contracts are currently in residence.
Elsewhere, put players have also been doing a fair share of neutral-to-bullish betting. In fact, during the course of the past 10 sessions, traders at the ISE, CBOE, and PHLX have sold to open 4.21 times as many puts as they've purchased. Diving deeper into the data reveals a number of short put positions have been initiated at the September 3.50 strike -- the home to peak put open interest in the front-month series.
Looking elsewhere points to a number of plausible explanations for the activity happening in AMD's options pits. To begin with, the equity is hovering near $3.62, indicating a limited profit potential for long put players.
Additionally, short interest jumped 26.8% throughout the last two reporting periods, and now accounts for 23.1% of the stock's available float. In other words, the recent uptick in call buying activity could represent short sellers picking up some options-related insurance. Now appears to be the time to do so, with the stock's Schaeffer's Volatility Index (SVI) reading of 47% ranked in the 11th percentile of its annual range. Simply stated, premium on AMD's short-term options is relatively inexpensive at current levels.
Finally, despite Advanced Micro Devices, Inc. (NYSE:AMD) enjoying a 51.8% gain in 2013, the stock has been stuck churning between $3.60 and $3.90 since taking a post-earnings dive in mid-July. The attraction toward short puts -- specifically at the September 3.50 strike -- could be indicative of traders expecting the lower end of this range to hold as support over the next four weeks.