AMD Weekly Options Alerts: Bulls Outnumber Bears, With Earnings Pending

Advanced Micro Devices, Inc. AMD traders have one more day to decide how to position themselves ahead of Wednesday’s earnings report. A number of options traders have been making some large bets on the stock over the past few days, and there seems to be more AMD bulls with deep pockets than bears.

AMD Signals Ahead Of Earnings

Benzinga Pro subscribers who have access to Benzinga Signals received several notifications about extraordinary options activity related to AMD on Monday. Here’s an overview of the notable options activity that was flagged by Signals:

• 1:10:23pm AMD Option Alert: Fri$16.5Calls Sweep (24) at the Ask: 934 @$0.87vs 6854 OI; Earnings 7/25 After Close Ref=$16.52
• 11:42:46am AMD Option Alert: Fri$16Calls Sweep (14) at the Bid: 527 @$1.051vs 10291 OI; Earnings 7/25 After Close Ref=$16.38
• 11:24:01am AMD Option Alert: Fri$15Calls at the Ask: 500 @$1.68vs 5490 OI; Earnings 7/25 After Close Ref=$16.35
• 11:23:40am AMD Option Alert: Fri$15Calls Sweep (4) at the Ask: 500 @$1.678vs 5490 OI; Earnings 7/25 After Close Ref=$16.35
• 9:53:47am AMD Option Alert: Fri$16Calls Sweep (2) at the Ask: 1000 @$0.97vs 10291 OI; Earnings 7/25 After Close Ref=$16.08
• 9:51:29am AMD Option Alert: Fri$16Calls Sweep (22) at the Bid: 725 @$0.95vs 10291 OI; Earnings 7/25 After Close Ref=$16.06

What Does It Mean?

As a reminder, call options purchased at the ask are typically seen as bullish for the stock, whereas calls purchased at the bid are typically seen as bearish.

To determine implied upside based on call options purchased at the ask, traders can add the contract price to the strike price, subtract the reference price, then divide by the reference price. The result can then be multiplied by 100 to give an implied percent upside or downside for the stock before that particular trade breaks even.

For calls purchased at the bid, traders can simply subtract the contract price from the strike price and then following the same procedure to determine potential downside.

AMD’s Earnings Outlook

For traders curious about the AMD trades above who don’t want to break out the calculators, Benzinga Pro determined that the group of trades flagged on Monday imply AMD bulls outnumber bears, but bulls see between 2 and 5.5 percent upside, while bears see between 6 and 8 percent downside.

Options traders are typically seen as more sophisticated and advanced than the average stock trader. That generalization is particularly considered to be true when it comes to options traders who place extremely large orders. In other words, when somebody makes a huge bet in the options market that a stock is going to go up or down, stock traders take it seriously. Of course, many traders use options bets to hedge large stock positions, so large options trades aren't always what they seem.

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