Advanced Micro Devices has failed to rally after a strong
earnings report, and now one big investor is looking for a drop.
optionMONSTER's Depth Charge tracking system detected the purchase
of about 6,800 September 7 puts for $0.40 against open interest of
just 688 contracts. The chipmaker must fall at least 11 percent by
expiration for the transaction to turn a profit.
AMD is off a penny to $7.43 in afternoon trading and down 24
percent in the last three months. It attempted to rally after rival
Intel's blowout earnings report last week, and reported its own
However, the stock has refused to push higher and is still holding
below its 50- and 200-day moving averages (black and red lines on
chart respectivly). Some chart watchers may interpret that as a
bearish pattern and expect further continued downside.
While momentum has been positive in the semiconductor space, AMD is
burdened with a relatively heavy debt load compared with most
rivals. That can be a drag when the credit market weakens, a
pattern reflected in recent earnings reports of investment banks
hurt by slower bond origination.
Overall options volume in AMD is only about 60 percent of the
average level, consistent with the thin activity in the broader
option markets. Puts account for the bulk of activity in the
(Chart courtesy of tradeMONSTER)
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