Bulls quintuple money in $AMD

Option traders who opened upside positions in Advanced Micro Devices this morning were logging huge gains by the afternoon.

Just after the opening bell, Investitute’s market scanners found that 2,400 Weekly $26.50 calls expiring on Aug. 31 were purchased for $0.30 to $0.41 with shares at $25.01. Volume was well above the strike’s open interest of 1,797 contracts, indicating that this was fresh buying.

Those calls traded up to $1.62 today, more than 5 times their initial purchase price. The stock rose 9.04% 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 as many sessions.

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 5.34% today to close at $25.26 after reaching $27.30 earlier in the session, its highest price in more than a decade. That adds to a gain of more than 7.5% in the previous session after Rosenblatt raised its price target on the chip maker to a Wall Street high of $30.