$AMD bulls score sixfold gains

Advanced Micro Devices has ripped to record highs this year, handing astronomic gains to upside option traders.

On June 6, Investitute’s market scanners identified the purchase of 7,500 October $17 calls for $1.11 as part of a bullish roll with shares at $15.19. Volume was far above the strike’s open interest of 1,968 contracts, showing that this was a new position.

Those calls traded for $7.18 just before the closing bell this afternoon, 6.5 times their purchase price. The stock surged 57.93% in the same time period, a huge move but still nowhere near that of its options.

It was one of several winning AMD trades in recent months, including one in the October $14 calls cited by Investitute co-founder Pete Najarian on CNBC’s “Halftime Report” at the time it occurred. Those calls ended today’s session trading for $10.04 from their purchase prices of $0.81 to $0.84 on May 14, a 12-fold increase.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

AMD jumped 7.58% to close at $23.98 today, just off an all-time high of $24 reached minutes earlier. Rosenblatt raised its price target on the chip maker yesterday to a Wall Street high of $30 from $27.