Advanced Micro Devices Options Bulls Brush Off Rare Bear Note

The July 34 call is popular today

Managing Editor
Jul 18, 2019 at 10:43 AM
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Technology powerhouse Advanced Micro Devices, Inc. (NASDAQ:AMD) is down 2% at $32.92 this morning, after Mizuho downgraded the chip stock to "neutral" from "buy." The firm did hike its price target to $37 from $33, but stated that it's moving to the sidelines due to pricing pressure from rival Intel (INTC), as well as the stock being past its former price target and trading near decade-plus highs. Overall, analysts have been extremely optimistic, with 11 of 20 covering firms sporting a "buy" or better recommendation coming into today.

AMD stock has had an overabundance of growth on the charts, already having doubled year-over-year. The 50-day moving average has served as a springboard for the shares throughout 2019, containing all pullbacks attempts since January. Further, AMD captured a 13-year peak of $34.86 this past Tuesday, July 16.

Looking into options, data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day call/put volume ratio of 2.44, ranking in the 79th percentile of its annual range. In other words, calls have been bought to open over puts at a faster-than-usual clip.

It's a similar trend in today's trading, with 73,000 calls on the tape so far, compared to 40,000 puts. Speculators may be purchasing new positions at the July 34 call, betting on AMD stock to bounce back above the strike by expiration at the close tomorrow, July 19.

Some of this recent call buying could be at the hands of shorts hedging against any additional upside risk. Although short interest grew a slim 2.7% during the past two reporting periods, it now accounts for 12.3% of the stock's total available float.

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