Options Traders Blast 2 Chip Stocks Trading Near Key Levels

Call buying has been popular on both chip stocks in recent weeks

Sep 5, 2017 at 12:17 PM
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There's been notable options volume on Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA), as both chip stocks trade near key technical levels. Here's a closer look at how options traders have been positioning themselves on shares of AMD and NVDA.

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.

most active stock options sept 5

Advanced Micro Devices Stock Attracts a Rare Batch of Put Buyers

Call buyers at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been blasting AMD at a near-annual-high clip in recent weeks, per the stock's 10-day call/put volume ratio of 4.63 -- just 8 percentage points from a 52-week peak. Drilling down, the security's weekly 9/22 12-strike and November 13 calls have seen some of the biggest increases in open interest over this time frame with a collective 46,862 contracts added, and the major options exchanges signaling buy-to-open activity.

Today, though, put volume is running at a faster-than-usual clip, with 30,000 contracts traded -- 1.5 times what's typically seen at this point in the day. The weekly 9/8 13-strike put is most active, and it looks like traders are purchasing new positions here. If this is the case, the goal is for Advanced Micro Devices to settle south of $13 at this Friday's close, when the weekly options expire.

At last check, AMD shares were trading down 1.7% at $12.97, as the broader stock market sells off on North Korea concerns. Longer term, the stock pulled back after hitting a 10-year high of $15.65 on July 26, but found a steady floor at its 200-day moving average. This served as a bullish signal following the last two times the equity came within one standard deviation of this trendline after an extended stay above it, according to data from White. Specifically, AMD went on to average a 21-day gain of 4.9%, and was positive both times one month out.

NVIDIA Options Traders Bet On a Quick Bounce

NVDA options traders have also initiated long calls relative to puts at a quick clip of late. At the ISE, CBOE, and PHLX, the security's 10-day call/put volume ratio of 1.62 ranks higher than 73% of all comparable readings taken in the past year. While the now-expired weekly 9/1 series was especially popular among call buyers in recent weeks, it looks like traders may have also bought to open the equity's weekly 9/8 170-strike call, per Trade-Alert.

Today, total options volume is running at a slower-than-usual pace, with about 30,000 calls and 25,000 puts exchanged. New positions are being initiated at the weekly 9/8 167.50-strike call, and it looks like some of the activity is of the buy-to-open kind. For those initiating long calls here, the expectation is for NVDA to stay above the strike through week's end.

Most recently, NVIDIA shares were seen trading down 2% at $167.08 -- selling off with its fellow tech stocks. The stock is still up an impressive 56.5% year-to-date, and continues to hover near its Aug. 8 record high of $174.56. What's more, the semiconductor stock's pullback from this milestone was quickly contained by its 40-day moving average, a trendline that served as a springboard for the shares in May and July.

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