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Unusual Options Activity on AMD, PCLN, TXN, and MU

Put players targeted AMD and PCLN, while a halo lift lured short-term speculators to TXN and MU

by 1/19/2012 9:16 AM
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Among the equities attracting options players on Wednesday were semiconductor concern Advanced Micro Devices, Inc. (AMD - 5.97), online travel titan Priceline.com Incorporated (PCLN - 518.83), and analog issues Texas Instruments Incorporated (TXN - 33.72) and Micron Technology, Inc. (MU - 7.65). Here's a quick roundup of some of the most popular options trades of the day:

  • First up, AMD garnered attention from put players yesterday, with about 12,000 of these contracts traded -- or roughly four times the norm. Digging deeper, it seems traders established new positions at the January 2012 5.50 and 6 strikes, which saw put open interest swell by about 3,700 and 2,750 contracts, respectively. What's more, nearly all of the front-month puts crossed at the ask price, pointing to buyer-driven volume. By purchasing the puts to open, the buyers are expecting AMD to retreat beneath the respective strikes by the end of the week, when January-dated options expire.
  • Meanwhile, it looks like traders employed puts to bet on support for PCLN. Specifically, put open interest at the January 2012 500 and 510 strikes ballooned by roughly 1,250 and 450 contracts, respectively. However, the majority of the puts crossed at the bid price, hinting at sell-to-open activity. By writing the puts to open, the sellers are hoping PCLN remains north of the respective strikes through January options expiration. In this best-case scenario, the puts will expire worthless, and the traders can pocket the initial premium received from the sale.
  • Moving on, TXN scored a halo lift from sector peer Linear Technology (LLTC) yesterday, attracting a slew of options speculators on both sides of the aisle. By the closing bell, the equity had seen about 35,000 calls and 26,000 puts change hands -- around seven times its average daily volume. Garnering the most attention was the now at-the-money January 2012 33 strike, which saw call open interest increase by close to 3,000 contracts, and put open interest jump by about 3,600 contracts overnight. Plus, most of the front-month options traded at the ask prices, pointing to buy-to-open activity.
  • Finally, MU also followed LLTC into the black, luring a batch of back-month call buyers ahead of its shareholder meeting on Jan. 24. Specifically, the near-the-money February 8 call saw close to 17,000 contracts traded -- 86% of which crossed at the ask price. Furthermore, call open interest at the February 8 strike jumped by more than 11,000 contracts overnight, confirming our theory of newly opened bullish bets.


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