Bulls triple their chips with $AMD calls

Bullish option traders tripled their money in Advanced Micro Devices (AMD) calls as shares rocketed higher this week.

On Apr. 6, Market Rebellion’s Unusual Activity Service detected the purchase of 7,000 Weekly $45 calls, expiring tomorrow, Apr. 9, for $0.86 to $1.42 with shares at $45.38. Volume was certainly above the strike’s previous open interest of 5,639 contracts, showing that this was a new positions.

Those calls traded up to $4.10 this afternoon, about 3 times their average purchase price. The stock rose 7.82% 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 ended the day up by 2.59% to $48.79. The semiconductor developer’s shares have rebounded sharply since their recent lows during the global COVID-19 outbreak.