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Option Brief: Advanced Micro Devices, Inc. (NYSE:AMD) call volume is elevated today compared to the intraday norm. So far, roughly 13,000 contracts are on the tape, more than 50% higher than usual. Leading the way is AMD's weekly 1/31 4-strike call, which has seen nearly 2,300 contracts change hands at midday.
The majority of the volume at the strike traded off the ask price, suggesting buyer-driven activity. What's more, implied volatility is higher, and just 410 contracts reside in open interest, pointing to the fresh minting of short-term bullish bets.
In this case, the near-the-money call buyers are looking for AMD shares to muscle north of $4 by weekly options expiration on Friday, Jan. 31. Specifically, they will begin to profit if the stock surges above $4.21, which is the sum of the strike price and the option's volume-weighted average price of $0.21. On the other hand, should Advanced Micro Devices -- currently up 2.2% to perch at $3.95 -- remain below $4 through the end of the month, the traders will sacrifice 100% of the initial premium paid.
That being said, another strategy could also be in place. Specifically, since one-quarter of AMD's float is sold short, it's possible today's call buyers are looking to hedge their short stock positions.
Prior to weekly options expiration, Advanced Micro Devices, Inc. (NYSE:AMD) is scheduled to take a turn in the earnings confessional, after the close on Tuesday, Jan. 21. The semiconductor name has not fared well in the aftermath of its most recent quarterly reports. Despite beating analysts' per-share profit estimates in six out of the past eight quarters, AMD has averaged single-day and single-week losses of 5.8% and 7.8%, respectively.