AMD Sees Bearish Unusual Option Trade Ahead of Earnings Report
$Advanced Micro Devices (AMD.US)$ saw a bearish $1.51 million trade in the call options just a day before the chipmaker is expected to report earnings that could test whether the stock is living up to the hype over artificial intelligence
Just seconds after the market opened Monday, an active seller sold call options giving the holders the right to buy 299,000 AMD shares at $160 each by the end of the week, according to exchange data tracked by moomoo.
The bearish unusual trade was posted at a time when analysts, on average, were expecting AMD to report a 375% jump in adjusted earnings to 92 cents a share for the third quarter that ended Sept. 30, according to estimates compiled by Bloomberg.
The surge in earnings is anchored on expectations that data center revenue could more than double to $3.46 billion. Revenue is seen climbing to a record $6.7 billion, buoyed by the company's fast-growing AI business.
AMD's stock has climbed 65% over the past year, tracking the advance in the $PHLX Semiconductor Index (.SOX.US)$ amid investor excitement over the potential for artificial intelligence and the advanced semiconductors required to power them. Still, those gains trailed the 241% jump in the shares of rival and market leader $NVIDIA (NVDA.US)$ over the same period.
The strength of AMD's MI300 series, which are accelerators meant to handle AI and high-performance computing (HPC), and its high-performance server processor EPYC is expected to make up for the cyclical weakness in gaming and embedded segments, Bloomberg Intelligence analysts said in a note on Thursday.
Piper Piper Sandler's Harsh Kumar sees AMD's revenue from MI300 and MI325 "comfortably" exceeding $5 billion this year and could climb to $10.2 billion by next year.
Investors are looking for clues on how AMD's new AI processors are performing compared with Nvidia's, Bloomberg quoted a TD Cowen analyst as saying.
While the biggest unusual trades so far were bearish, there's no shortage of AMD bulls. The price of the $160 call options is now up 19% at $5.40 per share, higher than the $5.05 paid for the bearish trade posted earlier. About 18,530 of those call options were traded so far, exceeding the open interest of 17,270. That makes those call options the most active contracts tied to the chipmaker. The second most traded options were the $170 calls.
The divide between the bulls and bears can be gleaned from AMD options open interest. The tally of outstanding contracts for put options that give holders the right to sell AMD shares at $130 each reached 101,850 across 22 expiration dates that stretch through Jan. 15, 2027.
On the bulls' side, the biggest open interest is in call options that give the holders the right to buy the stock at $200, with the total at 100,050.
So which side do you think will triump? Share your thoughts in the comments section. And if you have a price forecast for AMD, please vote below.
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Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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72393766 : Cnds
72125931 : Higher
Kevin Byrne : This article is mistaken. if call options were sold , it gives the buyer(s) the the right to acquire shares at the target price, not the seller.
Manolani808 : Jensen will watch out for his cousin Ms. Su
Zoooi3 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Luzi Ann Santos OP Kevin Byrne : Thanks for the feedback Kevin. Since the options were sold, as stated in the second paragraph, the buyers became the holders. So the holders (buyers) now have the right to buy the stock at $160.
71535617 Kevin Byrne : That's what the article says.
Laine Ford : maybe all stock good stock i.dont know about stock like. that so no comment now
Alen Kok : ok
Nore88 : Don’t worry about AMD. They never miss the expectation.
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