Options Traders Blitz Sinking Chip Stocks

MU and NVDA stocks have pulled back to their 80-day moving averages

by Karee Venema

Published on Dec 4, 2017 at 2:53 PM

It's been a rough week for tech stocks, after Morgan Stanley last Monday said it was time to take profits on semiconductors. Among those staring at stiff weekly losses -- and paring recent bitcoin gains -- are Advanced Micro Devices, Inc. (NASDAQ:AMD), Micron Technology, Inc. (NASDAQ:MU), and Nvidia Corporation (NASDAQ:NVDA), and the selling is continuing today. What's more, options volume is running high on AMD, MU, and NVDA, as traders look to get a piece of the action.

AMD Options Trader Sets a Short-Term Ceiling

Advanced Micro Devices options are trading at two times what's typically seen at this point in the day, with 137,738 calls and 84,994 puts on the tape. Most active is the weekly 12/8 10.50-strike call, where 14,849 contracts have traded. While it's not entirely clear what's happening here, it's possible speculators are selling to open new positions, expecting $10.50 to serve as a short-term ceiling through expiration at this Friday's close.

AMD stock briefly traded in positive territory at the start of the session -- hitting an intraday peak of $10.86 -- but was last seen down 5.4% at $10.15. Over the past week, the security has shed 12.2%, and is now staring at a year-to-date deficit of 10.5%. Nevertheless, the $10 level appears to be serving as support for Advanced Micro Devices stock, with this round number also containing an early May retreat. In fact, the equity hasn't closed a session in single-digit territory since Jan. 23.

MU Option Bear Lowers the Bar

More than 172,000 calls and 64,000 puts have traded on Micron Technology today, 1.3 times the expected intraday amount and total options volume pacing in the 93rd annual percentile. While the January series is hot -- accounting for the three most active options -- one shorter-term trader appears to be rolling her long weekly 12/8 42.50-strike puts down to the 40.50 strike. If this is the case, she expects bigger losses for MU stock by expiration at this Friday's close.

At last check, MU shares were down 3.5% to trade at $40.53. Over the past week, the security has plunged 15.7%, and is now down almost 19% from its Nov. 22 17-year peak of $49.89. However, just below the stock's current perch is its 80-day moving average, which helped usher Micron stock higher from May 2016 through last July.

NVDA Options Traders Bet on a Quick Bounce

Nvidia has seen 110,000 calls and 66,350 puts change hands so far, roughly 1.4 times the average intraday amount. The December 200 call is most active with 6,576 contracts on the tape, most of which appears to be of the buy-to-open kind. In this scenario, options traders are betting on NVDA stock rallying back above $200 by front-month options expiration at the close on Friday, Dec. 15. Elsewhere, sell-to-open activity is possibly occurring at the weekly 12/8 190- and 195-strike calls.

 NVDA shares started the session trading north of $200 -- notching a session high of $200.30 out of the gate -- but was last seen down 4% at $189.81. And while the security is down 11.5% in the past week and off 13.2% from its Nov. 10 record high of $218.67, it appears to have found a foothold atop its 80-day moving average. This trendline served as both support and resistance in early 2017, and has been ushering Nvidia stock higher since May.

VIX Options Signal Points to Possible Volatility Spike
VIX open interest is at an annual low
Altaba Stock May Be Sending Up a Buy Signal
AABA has seen some unusual options activity in the past couple of weeks
VFC Call Options Hot Ahead of Fiscal First-Quarter Earnings
VFC stock touched an all-time high earlier today
From Schaeffer's Pro Traders
Weekly Options Secrets Revealed

Direct from our Schaeffer's traders, your FREE guide to winning with weekly options!


Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


Trading Earnings Releases with Options
There are several “conventional” methods of trading earnings that most option traders are taught... Sponsored by TheoTrade
NHTC, AA, MRSN Stocks Suffer Nasty Pullbacks
A Chinese investigation is sinking NHTC
Alphabet Kicks Off Busy Week of Big-Cap Earnings
Dow components and FAANG stocks will be in focus next week
Trading Earnings Releases with Options
There are several “conventional” methods of trading earnings that most option traders are taught... Sponsored by TheoTrade