A huge trade is apparently betting that Advanced Micro Devices will give up its recent gains.
optionMONSTER's Depth Charge system detected the purchase of 30,000 March 3.50 puts on Friday morning for $0.48 and $0.49. Open interest in the strike was just 112 contracts before the trade appeared, showing that it is a new position.
These puts lock in the price where the stock can be sold no matter how far it might drop, gaining value in a selloff. Although they are often used to hedge long positions , the AMD puts are likely an outright bearish trade because they are in the money . (See our Education section)
AMD dropped 8.46 percent to $3.03 on Friday, just off its session low. The chip maker fell to $2.14 on Jan. 21--its lowest price since November 2012--after its last earnings report but then reversed and climbed to $3.37 by last Thursday.
The trading coincided with heavy put buying in the Market Vectors Semiconductor Fund on Friday, the second large bearish play on the sector in three sessions.
Total AMD option volume on Friday was more than 50 percent higher than its daily average for the last month. Overall puts outnumbered calls by a similar margin.
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