Advanced Micro Devices Stock Gets Blasted By Put Traders

AMD put open interest could reach a record high overnight

Mar 1, 2018 at 2:17 PM
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Options traders are blasting Advanced Micro Devices, Inc. (NASDAQ:AMD), as the chip stock sells off with the broader equities market. At last check, AMD shares were down 1.4% to trade at $11.94, and 363,931 puts are on the tape -- seven times what's typically seen at this point in the day, and volume pacing in the 100th annual percentile.

Most of the action has centered at the weekly 3/23 11-strike, April 10, and April 11 puts, where 308,399 contracts have been exchanged. This echoes Wednesday's options trading on AMD stock, according to Trade-Alert, and is likely at the hands of a delta-neutral put buyer, considering the bulk of the action at each strike is tied to stock.

Nevertheless, should this activity translate into new positions overnight, it could push AMD put open interest to 1.4 million contracts -- a record high. Currently, there are 1.26 million AMD puts outstanding, in the 99th percentile of its annual range.

Today's accelerated put activity is nothing new on Advanced Micro Devices stock, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AMD's 10-day put/call volume ratio of 0.98 ranks in the 98th annual percentile, meaning puts have been bought to open relative to calls at a faster-than-usual clip.

A large portion of this action has centered at the weekly 3/23 10.50-strike and April 9 puts, per data from the major options exchanges. If this is reflective of vanilla put buying, the expectation is for AMD shares to sink below the respective strikes over the next two months.

While the security was trading below $10.50 as recently as early January, it has not breached the $9 mark since December 2016. More recently, AMD shares are down almost 24% from July's decade high of $15.65, and are now trading south of the key $12 mark -- which has served as both support and resistance since late 2016.

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