AMD yielded huge gains on upside options just yesterday, and today those returns have surged above 1,000 percent.
On Tuesday, Investitute’s tracking systems found that 9,200 Weekly $12.50 calls expiring this Friday were purchased for $0.09 to $0.17 with shares at $12.08. Volume was above the strike’s open interest, indicating that these were new positions.
Today those calls traded up to $1.51, a profit of more than 1,000 percent in three sessions. The stock is up 15.6 percent in that time, illustrating the kind of leverage that can be achieved through options.
Long calls lock in the price where the 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 rallied 10.6 percent to close at $13.98 today. The company launched its new Epyc series of high-performance chip yesterday, challenging market leader Intel in business servers and data centers.