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Is Advanced Micro Devices, Inc. (AMD) headed back above $3?
Advanced Micro Devices, Inc. (NASDAQ:AMD) is up 1% out of the gate to wink at $2.95, and options traders are responding. At last check, calls were crossing at more than triple the expected intraday rate, and the stock's 30-day at-the-money implied volatility is 2.6% higher at 49.1% -- suggesting elevated demand for short-term strikes.
Along those lines, AMD's most active option by a mile is the at-the-money March 3 call, which is seeing buy-to-open activity. This includes a sweep of 3,780 contracts, initiated at a premium of 8 cents each -- for a total cash outlay of more than $30,000 (premium paid * number of contracts * 100 shares per contract). In short, this speculator expects the stock will topple $3 by next Friday's closing bell, when the front-month options expire.
Today's preference for long calls over puts represents a change of pace for AMD. Over the last 50 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity has seen more than two puts bought to open for every call. The resultant put/call volume ratio of 2.35 ranks in the 85th percentile of its annual range.
On a similar note, AMD's Schaeffer's put/call open interest ratio (SOIR) of 2.39 sits just 3 percentage points from a 12-month high. In other words, put open interest outweighs call open interest by a near-extreme 52-week margin, among contracts expiring in the next three months.
This skepticism is mildly surprising, considering Advanced Micro Devices, Inc. (NASDAQ:AMD) has advanced 10.5% on a year-to-date basis. However, the shares spent most of February struggling in the $3-$3.20 range, and have started March on a downtrend -- giving back 5.1%.