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Option traders have taken a shine to big-cap tech concerns International Business Machines Corp. (NYSE:IBM) and Microsoft Corporation (NASDAQ:MSFT), as well as semiconductor issue Advanced Micro Devices, Inc. (NYSE:AMD). Here's a look at how speculators have been placing their bets on these three names today.
- International Business Machines Corp. (NYSE:IBM) is dominating headlines today, after the firm inked a deal with Apple Inc. (NASDAQ:AAPL). IBM -- which reports second-quarter earnings tomorrow night -- was last seen 2.4% higher at $193.12, and the stock's options are flying off the shelves at nearly three times the normal intraday rate. Some speculators are employing puts to bet on short-term support at $192.50, selling to open the July 192.50 puts. The sellers will retain the entire net credit -- which represents the maximum reward -- if IBM remains north of the strike through Friday's close, when front-month options expire. More "vanilla" bulls are seemingly buying to open the July 195 call, amid hopes for IBM to extend today's uptrend through the end of the week.
- Microsoft Corporation (NASDAQ:MSFT) is following its sector peers higher, up 3.7% at $43.99 -- a new decade-plus peak. The stock's short-term options are in demand, as its 30-day at-the-money (ATM) implied volatility (IV) has popped 8.4% to 21.3%. Overall options volume is running at five times the intraday average, primarily due to a couple of large spreads. One trader apparently sold to close several thousand now in-the-money August 43 calls, and bought to open even more August 45 calls, amid expectations for MSFT to extend its quest for new highs and topple $45 within the next month. On the flip side, another speculator is likely gambling on a post-earnings dip for MSFT, establishing a bear put spread at the weekly 7/25 40 and 42 strikes. The spread will make money if MSFT settles south of $41.73 (bought strike minus net debit of $0.27) at the close on Friday, July 25 -- just three sessions after the company's turn in the earnings spotlight.
- Finally, Advanced Micro Devices, Inc. (NYSE:AMD) is 3% higher at $4.66, thanks to a halo lift from sector peer Intel Corporation (NASDAQ:INTC). Ahead of AMD's earnings release tomorrow night, speculators are rushing the options pits, with volume more than double the typical intraday rate. Short-term options, in particular, are popular; the equity's 30-day ATM IV has jumped 4.6% to 62.5%, and the two most active options expire within the next two weeks. Specifically, bears continue to dominate, buying to open the weekly 7/25 and July 4.50-strike puts, which will move into the money if AMD retreats beneath the strike within the options' respective lifetimes.