AMD, Micron Options Bulls Strike as Chip Stocks Soar

The tech sector is rallying today on a U.S.-China trade truce

Jul 1, 2019 at 11:10 AM
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The Nasdaq is outperforming in today's broad-market rally, with chip stocks leading the charge on a U.S.-China trade truce, which includes reducing sanctions on Chinese tech firm Huawei. Two names in particular making notable moves are Advanced Micro Devices, Inc. (NASDAQ:AMD) and Micron Technology, Inc. (NASDAQ:MU), and options traders are in overdrive.

Today's accelerated options activity is nothing new for AMD and MU. In fact, both names popped up on a list of stocks that have seen the most weekly options activity in the past 10 days, courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, with names highlighted in yellow new to the list. The bulk of the activity on each stock has occurred on the call side -- a trend that's being continued this morning.

most active weekly stock options on july 1

AMD Call Traders Active

Advanced Micro Devices saw 190,286 weekly call options change hands in the last 10 sessions, compared to 75,902 weekly put options. Today, around 86,000 calls are on the tape, 1.6 times what's typically seen and two times the number of puts traded.

The weekly 7/5 32-strike call is most active, and it looks like new positions are being purchased here for a volume-weighted average price of $0.47. If this is the case, breakeven for the call buyers at the close this Friday, July 5, is $32.47 (strike plus premium paid).

At last check, AMD stock is up 3.8% at $31.53, and briefly topped the $32 mark earlier. The shares have surged 71% year-to-date, and a recent pullback from their June 10 13-year high of $34.30 was neatly contained by their rising 30-day moving average.

Micron Traders Set a Lofty Goal

Over the past two weeks, Micron speculators have traded 141,133 weekly calls, compared to 116,766 weekly puts. So far today, 115,000 MU calls have been exchanged, four times the expected intraday amount and two times the number of puts on the tape.

Call buyers appear to be initiating new positions at the weekly 7/5 43 strike. By doing so, they expect Micron to break out above $43 by week's end.

MU stock hasn't closed a week above this strike price since May 3, most recently seen trading up 5.4% at $40.68. Since skimming the $32 mark in mid-June, the shares have surged 26.5%, and are on track to close above their 200-day moving average for the first time since May 6.

 

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