Bulls triple money in $AMD

Advanced Micro Devices spiked higher today, returning exponential gains on upside option positions.

On March 5, Investitute’s market scanners flagged the purchase of 5,800 May $24 calls for $2.12 to $2.15 with shares at $23.63. This was clearly fresh buying, as open interest in the strike was only 958 contracts before the activity appeared.

Those calls traded up to $6.60 today, more than 3 times their purchase prices. The stock rallied 26.62% in the same time frame, a large move but nowhere near that of its options on a relative basis.

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 jumped 8.49% to $29.02. Nomura Instinet said last night that it has initiated coverage of the chip maker with a “buy” rating and a $33 price target.