Put buyer anticipates drop in AMD

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Advanced Micro Devices has failed to rally after a strong earnings report, and now one big investor is looking for a drop.

AMD Chart 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 strong results.

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 name.

(Chart courtesy of tradeMONSTER)



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: AMD

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