Calls double overnight in $AMD

Option traders racked up exponential gains in Advanced Micro Devices today on bullish positions opened only one session earlier.

Just yesterday, Investitute’s market scanners showed that 6,500 Weekly $20.50 calls expiring on March 1 were purchased at the same time for $1.23 with shares at $19.49. This was clearly fresh buying, as open interest in the strike was only 583 contracts before the activity appeared.

Those calls traded for as much as $3.05 today, 2.5 times their purchase price. The stock rose 17.91% at the same time, showing how quickly options can far outpace gains in their underlying shares.

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 spiked higher by 19.95% to $23.09 today. The chip maker issued a strong outlook after announcing quarterly results last night.