AMD, NVDA See Heavy Options Trading, Tech Sector Spirals

Advanced Micro Devices was targeted for a synthetic long options play at the height of last week's rally

Jun 12, 2017 at 11:50 AM
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The 20 stocks listed in the table below have attracted the highest total 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. With tech shares sinking, two names of notable interest are semiconductor stocks Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA). Here's a quick look at how options traders have been placing bets on shares of AMD and NVDA.

most active stock options june 12

AMD Options Traders Remain Bullish

AMD stock jumped nearly 13% last week, driven higher on news Apple's iMac Pro will feature Advanced Micro Devices' chips, and bitcoin miners were boosting demand for its graphics cards. Nevertheless, the stock is getting hit by sector headwinds today, down 2% at $12.07. 

AMD options volume has popped amid this volatile price action, with 81,796 contracts traded so far -- 1.5 times what's typically seen. Most active is the June 11 call, where it looks as if new positions are being purchased. If this is the case, the expectation is for AMD stock to reverse course and extend its lead north of $11 through this Friday's close, when June options expire.

More broadly, the September 10 put and 14 call have seen the biggest increases in open interest in Advanced Micro Devices' options pits in the last two weeks, with more than 41,000 contracts collectively added. Trade-Alert indicates the majority of this activity occurred last Thursday, when one speculator initiated a risk reversal, or synthetic long, to bet on a longer-term breakout for AMD stock.

NVDA Stock Continues to Sink After Citron Note

NVIDIA stock rallied to a record high of $168.50 on Friday bringing its year-to-date advance to nearly 58% -- but quickly reversed course after a downbeat note from Citron Research. The noted short seller said it believes NVDA stock will retreat back to $130, with "the recent frenzy in NVDA shares ... fueled by an irresponsibly bullish number from Citi." Citron went on to say traders should take profits and buy Alphabet shares -- a theme echoed earlier last week in an Apple downgrade at Pacific Crest.

NVDA shares eventually settled Friday at $149.60, and today, they were most recently seen trading down 0.10% at $149.45. With the equity still on short-sale restricted list from last Friday, NVIDIA options volume is running at a slightly accelerated pace, with more than 125,000 contracts on the tape. The June 150 call is most active, and traders are likely buying to open new positions here. 

Widening the scope, the June 100 put is home to the equity's top open interest position, with 19,843 contracts outstanding. The bulk of this activity was initiated in late April and early May, when NVDA stock was trading just north of the century mark. 

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