$AMD calls quadruple in hours

Traders who opened bullish option positions in Advanced Micro Devices this morning were posting exponential gains just after lunchtime.

Less than 90 minutes into the session, Investitute’s tracking systems found that 14,000 Weekly $27 calls expiring this Friday were purchased for $0.17 to $0.60 with shares at $26.73. This was clearly fresh buying, as volume was well above the strike’s open interest of 8,248 contracts before the activity appeared. Investitute co-founder Pete Najarian cited the unusual activity on CNBC’s “Halftime Report” today.

Those calls traded up to to $1.57 by early afternoon, more than 4 times their average purchase price. The stock rose 5.97% at the same time, showing how quickly options can far outperform their underlying shares.

It was the second winning AMD trade posted on Investitute in the last week.

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 spiked higher by 11.48% to $28.06 today, reaching its highest level in more than a decade. Jefferies raised its price target on the stock to $30 from $22 this morning after meeting with management, saying that the semiconductor maker’s new server chip creates a “foundational shift” in competition with arch-rival Intel.