Chipmaker AMD Lower After Price-Target Cut, Taiwan Semiconductor Headwinds

Near-term traders have rarely been more put-biased toward AMD in the past 52 weeks

by Emma Duncan

Published on Apr 19, 2018 at 9:40 AM
Updated on Apr 19, 2018 at 9:42 AM

Chip concern Advanced Micro Devices, Inc. (NASDAQ:AMD) has dropped in early trading after receiving a price-target cut from Barclays to $9 from $10. AMD is far from the only tech issue trading lower this morning, however, as a weak outlook from Taiwan Semiconductor Manufacturing (TSM) is weighing on a number of high-profile names, including Apple (AAPL). This comes just a day after a quarterly update from Lam Research (LRCX) pulled down semiconductor stocks.

AMD was down 2% at $10.15 at last glance, bringing its year-over-year loss to more than 20%. While the stock has bounced back some since its annual low of $9.04 back on April 4 and is set for a third straight weekly win, it topped out yesterday near familiar resistance at the 32-day moving average, right near a trendline connecting lower highs since the January peak. 

The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.08 ranks in the 84th percentile of its annual range. This lofty ranking suggests that near-term traders have rarely been more put-biased in the past year, so options traders are seemingly well positioned for a pullback.

Plus, short interest on the security rose 14% during the past two reporting periods, and now represents 22% of the stock's total available float. In fact, the nearly 182 million AMD shares sold short are the most since at least 2002, and equate to more than three times the stock's average daily trading volume.

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