Advanced Micro Devices, 3D Systems See Influx of Call Trading

Call volume has been accelerated on Advanced Micro Devices, Inc. (AMD) and 3D Systems Corporation (DDD)

Feb 27, 2017 at 1:20 PM
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The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that have attracted the highest total options volume during the past 10 trading days. Names 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 stock Advanced Micro Devices, Inc. (NASDAQ:AMD) and 3-D printing firm 3D Systems Corporation (NYSE:DDD). Here's a quick look at how options traders are placing their bets on shares of AMD and DDD.

most active options

Options Traders Buy Calls as Advanced Micro Devices Stock Soars

Options traders have set their sights on AMD in recent weeks, with a clear tilt toward calls. Specifically, 524,058 calls have traded on AMD in the last 10 sessions, compared to 281,736 puts. The now-expired weekly 2/24 14-strike call saw the most action during that time frame -- with 66,759 contracts traded -- followed by the March 13 and 14 calls, and the April 14 call. Data from the major options exchanges confirms significant buy-to-open activity at each strike, suggesting call buyers are betting on more gains for AMD in the near term.

However, shareholders may also be using options to protect paper profits against any near-term headwinds. Specifically, AMD's April 14 put saw the largest rise in open interest over the last two weeks, with 16,870 contracts added, and is now home to the stock's top put open interest position. Trade-Alert indicates the bulk of this activity occurred last Thursday, and was of the buy-to-open kind.

Technically, AMD has been been ripping higher in 2017, up 34%. The shares of Advanced Micro Devices, Inc. are extending this upside today, trading 7.6% higher at $15.19 -- and fresh off a nine-year peak of $15.35. Calls are once again the options of choice, with 160,000 traded at last check -- on track to settle in the 100th annual percentile -- compared to 80,000 puts. Most active is the weekly 3/3 15-strike call, where it appears traders are purchasing new positions to bet on more gains through expiration at this Friday's close.

Call Volume Picks Up On 3D Systems Ahead of Earnings

DDD will report fourth-quarter earnings ahead of tomorrow's open, and options traders have been actively trading calls in the weeks leading up to the event. In the past 10 sessions, 32,262 calls have changed hands on DDD, compared to 9,662 puts. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) confirms elevated buy-to-open activity, too, per DDD's 10-day call/put volume ratio of 3.58 -- in the 97th percentile of its annual range.

In today's trading, with 5,200 calls and 3,690 puts on the tape, more than two times what's typically seen at this point in the session. DDD's weekly 3/3 19-strike call is most active, with more than 2,000 contracts traded. However, it seems most speculators are either setting a near-term ceiling for DDD or hoping for a post-earnings volatility crush. Specifically, there appears to be notable sell-to-open activity occurring at this weekly strike, which expires at Friday's close, and implied volatility for the option is up 17.6 percentage points at last check.

Looking at the charts, the last time DDD explored territory north of $19 was last April. Nevertheless, the stock has been making a series of higher highs in recent months, and is up 36.7% since its early November low at $12.34, last seen at $16.87. Meanwhile, the shares have a history of positive post-earnings reactions -- settling to the upside in the session subsequent to reporting in five of the past seven quarters. This time around, the options market is pricing in a lofty 12.4% move for 3D Systems Corporation in tomorrow's trading.

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