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One Advanced Micro Devices, Inc. (AMD) speculator bought to open 30,000 puts today
Advanced Micro Devices, Inc. (NASDAQ:AMD) is getting battered this morning, down 7.3% to trade at $3.07. Meanwhile, options traders are wagering on additional losses, with puts running at three times the typical intraday pace.
The vast majority of today's AMD put volume can be traced to a single speculator who bought to open 30,000 contracts at the March 3.50 strike, according to Trade-Alert. Specifically, the trader shelled out a premium of $0.49 for each contract, resulting in a total cash outlay of nearly $1.5 million (premium paid * number of contracts * 100 shares per contract).
This initial debit represents the speculator's maximum potential risk, should AMD finish above the strike at expiration -- at the close on Friday, March 20. By contrast, gains will increase the closer AMD moves to zero.
Puts have been the options of choice in recent months, as far as AMD is concerned. The stock's 50-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at 2.52 -- just 8 percentage points from an annual peak.
In like manner, AMD's Schaeffer's put/call open interest ratio (SOIR) sits at a put-skewed 1.84 -- with put open interest nearly doubling call open interest, among options with a shelf-life of three months or less. More significantly, this SOIR outstrips 95% of similar readings from the past year.
There's a reason for this pessimism, too. Advanced Micro Devices, Inc. (NASDAQ:AMD) has been a long-term technical laggard, tumbling more than 15% on a year-over-year basis.