Stocks quoted in this article:
Option Brief: Advanced Micro Devices, Inc. (NYSE:AMD) call volume ran at a 25% mark-up to the daily norm on Friday. What's more, the 23,000 contracts traded more than doubled the number of puts that crossed the tape.
Digging deeper, the most active non-expiring contract during Friday's session was AMD's April 4 call, where nearly 4,300 contracts changed hands -- 87% at the ask price, suggesting they were bought. What's more, implied volatility muscled higher, and open interest gained about 2,800 contracts over the weekend, indicating positions were freshly initiated.
In other words, the option bulls expect AMD -- currently 1% higher at $3.72 -- to topple the 4 strike by April options expiration, in roughly eight weeks. Of course, considering nearly 24% of the stock's float is sold short, it's also possible the out-of-the-money calls were purchased to hedge against a potential rally. Regardless of what happens, the most the traders have on the line is the initial premium paid.
Technically speaking, Advanced Micro Devices, Inc. (NYSE:AMD) has gained roughly 42% on a year-over-year basis. However, for the past couple of weeks, the shares have traded in a tight range around the $3.70 level.