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Call Volume Hits Fever Pitch on Advanced Micro Devices, Inc. (AMD)

One trader zeroed in on AMD's January-dated calls

by 12/5/2013 11:10 AM
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Option Brief: Call players are targeting Advanced Micro Devices, Inc. (NYSE:AMD) today, as approximately 17,000 contracts have switched hands thus far -- three times the equity's expected intraday call volume. By contrast, fewer than 100 puts have been exchanged.

Snagging the lion's share of the action is the January 2014 4 strike, where north of 10,200 calls have traded, including a block of 8,661 contracts. Since implied volatility ticked higher during this transaction, it's possible that fresh bullish bets were established here. In this scenario, the speculator is counting on AMD to muscle north of the $4 level by January 2014 options expiration -- a feat not accomplished on a daily closing basis since Oct. 17, the day before an earnings-induced bearish gap.

It should also be noted that short interest on the semiconductor name climbed by 15.1% during the most recent reporting period, and now accounts for a hefty 19.5% of the stock's available float. In other words, it's possible that today's out-of-the-money call buyer is actually a short seller looking to hedge his pessimistic position. Either way, he can rest assured that these contracts were purchased at a bargain. AMD's Schaeffer's Volatility Index (SVI) of 48% ranks lower than all but 8% of similar readings taken over the past year, suggesting the security's near-term options are relatively inexpensive right now.

Despite the aforementioned loss in October, Advanced Micro Devices, Inc. (NYSE:AMD) still boasts a year-to-date gain of more than 51%. At last check, the shares were up about 1.7% to wink at the $3.63 level, following reports that global semiconductor sales soared a sequential 7.2% in October.


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