Bulls quintuple money in $AMD

Bullish option traders racked up major gains in Advanced Micro Devices today thanks to strong quarterly results.

On May 14, Investitute’s tracking systems detected the purchase of 12,000 October $14 calls for $0.81 to $0.84 with shares at $12.21. Volume was well above the strikes open interest of 7,889 contracts, indicating that this was fresh buying. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded up to $4.68 today, more than 5.5 times their purchase prices. The stock soared 50.78% in the same time period, a huge move but still nowhere near that of its options.

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 surged 14.33% to $18.35 today. The chip maker beat earnings and revenue estimates after the market closed yesterday.