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Option bulls took a shine to Advanced Micro Devices, Inc. (NYSE:AMD - 2.59) on Friday, with traders anticipating more short-term upside for the tech concern. During the course of the session, AMD saw roughly 13,000 calls change hands -- more than six times the number of puts exchanged.
More than half the volume transpired at the February 2.50 call, which saw close to 7,000 contracts cross the tape. Nearly all of the calls traded at the ask price, and call open interest at the back-month strike shot higher over the weekend, pointing to buy-to-open activity.
By purchasing the calls to open, the buyers are expecting AMD to extend its journey north of $2.50 over the next several weeks. More specifically, the volume-weighted average price (VWAP) of the calls was $0.27, meaning the buyers will profit if AMD topples the $2.77 level (strike plus VWAP) by February options expiration. However, the most the buyers can possibly lose is capped at the initial premium paid for the calls.
Expanding the sentiment scope, we find that Friday's affinity for bullish bets is nothing new for AMD. In fact, during the past two weeks, traders have bought to open more than nine calls for every put on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). What's more, the stock's 10-day call/put volume ratio of 9.06 ranks in the 85th percentile of its annual range, suggesting option buyers are picking up calls over puts at a faster-than-usual clip.
Likewise, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.41 indicates that calls more than double puts among options expiring within three months. Plus, this ratio registers in the 32nd percentile of its annual range, implying that near-term options traders are more call-biased than usual right now.
Technically speaking, the shares of AMD are lingering in the $2.59 neighborhood -- meaning the preference for calls over puts isn't too surprising, since downside potential is limited. However, since touching a multi-year low of $1.81 in mid-November, the security has muscled about 43% higher, and is now poised to face off with its 20-week moving average -- a trendline that hasn't been conquered since early May.
Fundamentally, the company is attending the Consumer Electronics Show (CES), and will reportedly take its turn in the spotlight sometime today. Separately, the firm this morning named Roy Taylor corporate vice president and head of Global Channel Sales, and will unveil its quarterly earnings report on Tuesday, Jan. 22.