$AMD bulls strike a winner in calls

Bullish option traders who opened upside call positions in Advanced Micro Devices (AMD) less than three weeks ago are making big gains today as shares climb.

On Nov. 11, Market Rebellion’s Unusual Activity Service detected the purchase of 4,500 Weekly $88 calls expiring this Friday for $1.17 to $1.27 with shares at $80.48. Volume was certainly above the strike’s previous open interest of 213 contracts, showing that this was a new position.

Those calls traded have traded for as much as $5.20 today, at least 4 times their purchase prices. The stock rose 14.97% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

AMD was last up by 5.6% to $92.07, just below its recent all-time-high daily closing price of $92.18 made in early Sep.