Puts target more losses in AMD
Traders are looking for new lows in Advanced Micro Devices.
optionMONSTER's Depth Charge system detected the purchase of more than 5,300 Weekly 2.50 puts expiring Nov. 28 for $0.11 to $0.13 yesterday. Volume was more than 80 times the previous open interest in the strike, which indicates that new positions were established.
These puts lock in the price where shares can be sold in the ailing semiconductor company, so they will gain value if the stock falls. Investors can use these options to hedge long positions or to speculate on a drop. (See our Education section)
AMD declined 4.69 percent to $2.64 yesterday. The stock has gotten slammed recently, first when its CEO stepped down on Oct. 8, then on Microchip Technology's industry warning on Oct. 9, and again on poor quarterly numbers of its own last Friday. Unlike many other chip makers, AMD never recovered from the initial selloff and remains near its 52-week intraday low of $2.54.
Yesterday's heavy put buying was noted by optionMONSTER co-founder Pete Najarian on CNBC's " Fast Money " show last night.
(A version of this post appeared on InsideOptions Pro yesterday.)
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