Bears double money in $AMD

Downside option positions draw large profits today as Advanced Micro Devices continued to slide.

On Oct. 15, Investitute’s proprietary programs flagged the purchase of 3,000 February $26 puts for $3.90 with shres at $26.37 as part of a bearish combination trade. This was clearly a new position, as volume was above the strike’s previous open interest of 2,840 contracts.

Those puts traded up to $8.89 late today, more than twice their purchase price. The stock plunged 33.67% in the same time frame, a huge move but nowhere near that of its options on a relative basis.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

AMD dropped another 8.51% today to close at $17.63. The chip maker’s revenue and guidance came in lower than expected after the market closed Wednesday.