Schaeffer's Options Center
Sponsored by:
Schaeffer's Daily Option Blog

Advanced Micro Devices, Inc. (AMD) Option Bulls Bet On a Summer Pop

Advanced Micro Devices, Inc.'s July 4 call was popular on Tuesday

by 4/30/2014 10:11 AM
Stocks quoted in this article:

Option Brief: After shooting past $4 in the wake of a solid earnings report and subsequent price-target hikes last week, Advanced Micro Devices, Inc. (NYSE:AMD) is once again consolidating around this level, which has served as both support and resistance throughout the past two months. In yesterday's session, a number of optimistic option players bet on AMD to extend its lead past this mark over the next three months, as more than one-third of the day's call volume centered on the July 4 strike.

Specifically, 2,707 contracts were traded here -- 77% at the ask price, pointing to buyer-driven volume. What's more, implied volatility rose 1.2 percentage points and open interest rose the most of any strike overnight, making it safe to assume that a fresh batch of bullish bets was initiated. With AMD lingering near $4.02, these calls are sitting right at the money. Based on the volume-weighted average price (VWAP) of $0.36, though, breakeven at the close on Friday, July 18 -- when the options expire -- is $4.36 (strike plus VWAP).

Ahead of Tuesday's call-skewed session (calls outpaced puts by a more than 4-to-1 margin), bears were in control of AMD's options pits, which isn't all that surprising considering the stock is off 12.6% from its Jan. 15 year-to-date high of $4.60. However, AMD's next earnings report is tentatively scheduled for the week of July 14. Given that July-dated options will likely expire after those earnings are released, Tuesday's call buyers could be hoping for another single-session post-earnings pop of 11.7%, like the one the shares notched earlier this month. Regardless, should the stock fail to maintain its perch atop the $4 mark over the next several months and the options expire out of the money, risk to those traders still holding onto their positions is limited to the initial premium paid.


permalink

Featured Brokers
ADVERTISEMENT
Unusual Option Volume
Option Flow
ADVERTISEMENT
ADVERTISEMENT
Most Active Stocks
Most Active Option Strikes
Largest Open Interest

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.