Bears triple their money in $AMD

AMD has declined steadily in recent weeks, resulting in big gains for downside option positions.

On March 16, Investitute’s market scanners showed that 6,160 Weekly $11.50 calls expiring on April 6 were purchased for $0.59 as part of a bearish roll with shares at $11.39. This was clearly a new position, volume was well above the strike’s open interest of 2,388 contracts.

Those puts traded for $1.72 today, 3 times their purchase price. The stock fell 13.8% in the same time frame, illustrating the kind of leverage that options can provide over their share price.

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 was down 1.9% today to close at $9.81. The chip maker has pulled back with the rest of the semiconductor space.