Advanced Micro Devices, Inc. (AMD) Bulls Active Amid Buyout Buzz

Advanced Micro Devices, Inc. (AMD) is soaring on buyout rumors

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Published on Jan 26, 2015 at 1:41 PM
Updated on Apr 20, 2015 at 5:32 PM

Advanced Micro Devices, Inc. (NASDAQ:AMD) has surged 5.7% on unconfirmed rumors that a Chinese tech firm may be considering a buyout. Option bulls are responding in force, with calls flying off the shelves at 12 times the usual intraday pace, and outstripping puts 44,000 contracts to 30,000. Short-term strikes are in focus, too, based on a 12.8% rise in the stock's 30-day at-the-money implied volatility -- now at 50.6%.

Based on data from Trade-Alert, buy-to-open activity is transpiring at the weekly 1/30 2.50-strike call. More than 14,600 contracts have crossed the tape at this now in-the-money strike -- more than any other AMD option -- as traders wager on an extended advance north of $2.50 through Friday's close, when the weekly series expires.

Today's call-skewed session represents a break from the prevailing trend. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open nearly eight AMD puts for every call. The resultant put/call volume ratio of 7.65 sits just 4 percentage points from a 12-month peak.

In like manner, the stock's Schaeffer's put/call open interest ratio (SOIR) of 3.41 outstrips 98% of comparable readings from the last year. In other words, short-term traders have rarely preferred puts over calls more strongly than they do now.

This is understandable, given Advanced Micro Devices, Inc.'s (NASDAQ:AMD) longer-term technical struggles. Year-over-year, the stock has lost nearly one-quarter of its value, and was last seen at $2.59.


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