Bulls are collecting their chips in $AMD

Bullish option traders who opened upside call positions in Advanced Micro Devices (AMD) on Monday, Jul. 20, are making big gains today as shares climb higher.

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity in the name early this week with shares at $55.88:

–On Jul. 20, 8,900 Weekly $57 calls expiring on Jul. 24 were purchased for $0.54 to $1.00 above open interest of 6,179 contracts.
–Also on Jul. 20, 13,800 Weekly $58 calls expiring on Jul. 24 were purchased for $0.34 to $0.70 above open interest of 7,764 contracts.

Those calls traded up to $5.15 and $4.20 this afternoon, at least 5 and 6 times their purchase prices, respectively. The stock rose as much as 10.74% 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 7.7% to $61.39, just off a new high of $61.89 made earlier in the session. The semiconductor developer will report its Q2 earnings on Jul. 28 after the close.