Most Active Weekly Options: NVIDIA Corporation and Advanced Micro Devices, Inc.

Weekly options traders have taken aim at semiconductor stocks NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD)

Nov 21, 2016 at 11:30 AM
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The 20 stocks listed in the table below have attracted the highest weekly options volume during the past 10 trading days. Stocks highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Two names of notable interest are semiconductor stocks NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD). Here's a quick look at how options traders are lining up on NVDA stock and AMD stock.

Most active weekly options November 21

It's been a banner year thus far for NVDA, which has added roughly 183% in 2016, and remains within striking distance of fresh record highs. The shares are pulling back slightly this morning -- last seen off 0.2% at $93.14 -- despite a bullish write-up in Barron's (subscription required) over the weekend, which posited that both NVDA and AMD could have more room to run.

NVDA has been surrounded by skepticism, despite its technical prowess. In fact, the 12.6% of the stock's total float sold short would take almost two weeks to buy back, at its typical daily pace. An unwinding of this lingering pessimism could spur the shares on to higher highs.

Put players have been targeting NVDA in recent weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). In fact, the stock's 10-day put/call volume ratio of 0.82 ranks near the top quartile of all readings from the past 12 months. The weekly 12/2 75-strike put saw the largest rise in open interest of all NVDA options over the last 10 days, though it seems reasonable to assume some of these out-of-the-money puts were bought by shareholders hedging against a surprise pullback.

Today, NVDA calls are accelerated, changing hands at roughly 1.4 times the typical intraday rate, with call volume running in the 94th percentile of its annual range. Leading the action is the weekly 11/25 92-strike call, where it appears some traders are selling to close their in-the-money positions. Elsewhere, other speculators seem to be betting against a breakout before week's end, selling to open the weekly 11/25 94-strike call.

Notably, now could be a prime time to pick up premium on NVIDIA Corporation's (NASDAQ:NVDA), with the stock's short-term options pricing in unusually low volatility expectations. Specifically, the equity's Schaeffer's Volatility Index (SVI) of 39%  sits lower than 82% of all readings from the past 12 months. Meanwhile, its Schaeffer's Volatility Scorecard (SVS) of 96 indicates the options market has underpriced the stock's ability to make big moves on the charts over the last year.

AMD is starting this week with a bang, tapping a fresh five-year high of $9.22 right out of the gate. But this is just more of the same for the stock, which has more than tripled in value year-to-date, recently barreling past previous resistance in the $7.50-$7.70 region. The shares are still booming today, up 2.9% to $8.96 at last check.

In spite of this incredible technical performance, options traders have been setting the bar low for AMD. The stock's 10-day put/call volume ratio at the ISE, CBOE, and PHLX clocks in at 0.41 -- higher than 70% of all readings from the past year. It's still an attractive time to pick up AMD's short-term options, too, with its SVI of 63% in the low 19th annual percentile, and its SVS parked at a high 95.

Today, the security's options are flying off the shelves, with AMD puts trading at double the expected volume for this point in the day. Moreover, total options volume is on pace to finish in the 98th annual percentile. It looks like some bulls have joined the action, too, with likely buy-to-open activity spotted at the stock's weekly 11/25 9.50-strike call. The goal is for AMD to rally beyond $9.50 before the options expire on Friday.

It certainly looks like Barron's has a point about AMD's potential, too. While short interest has been dropping in recent weeks, these bearish bets still represent more than 13% of the stock's available float. Plus, 12 out of 19 analysts rate Advanced Micro Devices, Inc. (NASDAQ:AMD) a "hold" or worse, leaving the door open for future upgrades that could send the stock higher.

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