Advanced Micro Devices, Inc., Micron Technology, Inc. Options Pop on Halo Lift

Semiconductor stocks Advanced Micro Devices, Inc. (NASDAQ:AMD) and Micron Technology, Inc. (NASDAQ:MU) are notably higher, and options traders are taking notice

Aug 19, 2016 at 12:41 PM
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Semiconductor stocks Advanced Micro Devices, Inc. (NASDAQ:AMD) and Micron Technology, Inc. (NASDAQ:MU) are notably higher today, thanks to an earnings-related halo lift from sector peer Applied Materials, Inc. (NASDAQ:AMAT). In fact, the Market Vectors Semiconductor ETF (NYSEARCA:SMH) is set for its eighth straight weekly win -- a feat accomplished just one other time, in late 2014 -- and just hit an all-time best. AMD was last seen 11.4% higher and just off a fresh four-year peak of $8, while MU has jumped 3.8% to sit at $16.38. What's more, options bulls are rushing the semiconductor duo to bet on even higher highs in the short term.

AMD has more than quadrupled in the past year, roughly doubling in the past three months alone. Even before today's surge, the equity had outperformed the broader S&P 500 Index (SPX) by a whopping 61 percentage points in the past 60 sessions.

Today, AMD options are trading at three times the average intraday pace, though calls have more than doubled puts. It looks like some speculators are buying to open the weekly 8/26 7-strike call, as well as the September 7 and 8 calls, to bet on even more upside for AMD in the next few weeks.

However, call buying was picking up steam even before today's jump. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio sits at a lofty 10.33 -- higher than 70% of all other readings from the past year. In the same vein, Advanced Micro Devices, Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 0.48 indicates that near-term calls more than double puts. This ratio is in the 23rd percentile of its annual range, reflecting a bigger-than-usual call bias among near-term traders.

MU has rallied more than 50% in the past three months, and is on pace to close the month atop its 80-month moving average for the first time in 2016. Prior to today, MU had outpaced the SPX by a healthy 30 percentage points, and its 14-day Relative Strength Index (RSI) already sat at 70, on the cusp of "overbought" territory.

MU calls have changed hands at three times the average intraday pace, with calls outnumbering puts by a margin of nearly 7-to-1. It looks like one speculator may be rolling his position up and out, possibly taking profits on August 12 calls and buying to open even more October 16 calls.

As with AMD, Micron Technology, Inc. is no stranger to optimistic attention in the options arena. The stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 5.18 is in the 81st percentile of its annual range, indicating a healthier-than-usual appetite for long calls over puts of late. Likewise, MU's SOIR comes in at just 0.35 -- lower than 95% of all other readings from the past year.


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