AMD's recent pullback was contained by its 30-day moving average
Few (if any) chip stocks have had as strong a summer as Advanced Micro Devices, Inc. (NASDAQ:AMD). At last check, AMD was up 2.3% to trade at $16.82, and has almost doubled since its April 4 lows of $9.04. Amidst this hot streak, options traders have been piling on.
In fact, the stock popped up on Schaeffer's Senior Quantitative Analyst Rocky White's list of 20 stocks that have attracted the highest options volume during the past 10 trading days. (Names highlighted in yellow are new to the list.) While AMD call volume was more prevalent on an absolute basis -- and while short-term calls are most active today -- near-term options traders are still more put-skewed than usual right now.
As alluded to above, short-term traders are more put-skewed than usual toward the chip stock, as evidenced by AMD's Schaeffer's put/call open interest ratio (SOIR) of 1.10, which ranks in the 82nd annual percentile. An unwinding of skepticism in the options pits could create more tailwinds for the equity.
Digging deeper, the July 16 put saw one of the biggest increases in open interest over the past two weeks, adding 8,582 contracts. Data from the major options exchanges points to a mixture of buy- and sell-to-open activity at the strike. Those buying the puts anticipate a swift pullback from AMD, while those writing the puts see the $16 level holding as near-term support.
Today, short-term calls are attracting notable attention. Specifically, it appears speculators are buying to open the July 16.50 and 17 calls -- the most active AMD options so far -- expecting more upside for AMD before Friday's close, which doesn't encompass the company's expected earnings release next Monday, July 23.
A short squeeze could also help AMD sustain its hot streak. Short interest fell by 5% in the most recent reporting period, yet the 164.31 million shares sold short still represents 20% of AMD's total available float.
Earlier today, Stifel upped its price target on the chipmaker to $21 from $17 -- territory AMD has not seen since 2007. The analyst noted that AMD could steal some of the PC and server CPU market share from rival Intel (INTC) in 2019. The shares have added 64% in 2018, which culminated in an 11-year high of $17.34 on June 18, while their 30-day moving average contained the subsequent pullback.
