Analyst Upgrades Could Spark More Upside For AMD Stock

Plus, more than one-fifth of the stocks available float is dedicated to short interest

Jun 26, 2018 at 10:28 AM
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Advanced Micro Devices, Inc. (NASDAQ:AMD) rallied hard off its early April lows near $9, topping out at an 11-year peak at $17.34 this past Monday, June 18. Since then, the chip stock has pulled back to its rising 20-day moving average, which currently resides in the $15-$16 area -- a level of resistance in early and mid-2017, that could now be switching to a more supportive role.

amd daily chart june 22

There's plenty of skepticism priced into the shares, which are up a whopping 53% year-to-date. In fact, half of the analysts covering AMD maintain a "hold" or "sell" rating . This leaves the door wide open for upgrades to help stoke the bullish flames.

Plus, 174.6 million AMD shares are dedicated to short interest. This represents more than one-fifth of the stock's available float, and would take almost four days to cover, at the average pace of trading. A capitulation from some of the weaker bearish hands could buy the equity.

Short-term options are pricing in relatively low volatility expectations, as Schaeffer's Volatility Index (SVI) of 49% ranks in the modest 25th annual percentile. This points to relatively tame premiums at the moment.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this AMD commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
 

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