AMD Options Traders Bearish Ahead of Earnings

AMD stock has been among the best to own in February

Managing Editor
Jan 29, 2018 at 12:50 PM
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Advanced Micro Devices, Inc. (NASDAQ:AMD) is scheduled to report fourth-quarter earnings after tomorrow's close. Below, we will take a look at how AMD stock has been faring on the charts, and how options traders are speculating on the semiconductor name -- which is on the cusp of a historically bullish month.

AMD stock has gained more than 27% so far in 2018, and rallied roughly 36% from its Dec. 5 low of $9.70. Furthermore, the equity's current perch represents a level roughly equivalent to a 61.8% Fibonacci retracement of the stock's July 2017 high and its December 2017 low. AMD stock was last seen 2.1% higher at $13.22.

Daily AMD Chart

The chip name has a rocky earnings history. AMD has been lower the day after earnings in four of the last eight quarters --  including a 13.5% dip last October. The shares have averaged a single-session post-earnings swing of 17.1% in either direction, looking back two years. This time around, the options market is pricing in a 15.5% move, per at-the-money implied volatility data.

Short sellers continue to pile on. Short interest increased by 5% during the last reporting period, to 175.83 million shares, up 45% since May. This represents a hefty 21% of AMD's total available float. 

Options traders have also been more bearish in recent weeks. AMD's Schaeffer's put/call open interest ratio (SOIR) sits at 1.07, in the 99th percentile of its annual range. This points to a much bigger-than-usual put bias among near-term traders. 

However, it should be noted that Advanced Micro Devices has been one of the best stocks to own in the month of February, historically. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, the equity has averaged a gain of 8.94% for the month, looking back 10 years. A similar surge from current levels would place AMD stock around $14.40 -- back near its October highs.

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