Advanced Micro Devices, Inc. (NASDAQ:AMD) is scheduled to report third-quarter earnings after tomorrow's close. AMD stock has a history of making big post-earnings moves, with the shares swinging, on average, 15.6% in the session subsequent to reporting over the past eight quarters. The options market is expecting more of the same this time around, pricing in a 13.9% move for tomorrow's trading, regardless of direction.
Drilling down on recent AMD options activity, it appears as if speculative players are betting on the post-earnings price action to resolve to the upside. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), options traders have bought to open 123,269 calls over the past 10 sessions, compared to 42,015 puts.
Among notable near-term strikes options traders have targeted are the weekly 10/27 14-strike call and the November 13 call, home to 20,678 contracts and 50,963 contracts, respectively. Data from the major options exchanges confirms significant buy-to-open activity at each of these calls, meaning options traders expect AMD to settle north of the strike prices at expiration.
Outside of the options arena, short sellers have been ramping up their exposure to AMD stock recently. Short interest on the equity jumped 7.7% in the two latest reporting periods to 160.54 million shares -- the most in at least 15 years. What's more, these bearish bets account for roughly 19% of the security's available float, and would take about two days to cover, based on Advanced Micro Devices' average pace of trading.
Analysts, meanwhile, are more mixed. Of the 20 brokerages covering the shares, 10 maintain a "strong buy" rating, eight a tepid "hold," and two have "strong sell" recommendations. Echoing this, the average 12-month price target of $14.23 is right in line with the current AMD share price.
In fact, at last check, AMD stock was trading at $14.13 -- up 2.3% on the day. More broadly, the shares pulled back from their 10-year high of $15.65 in late July was quickly contained by the rising 200-day moving average, while the 10-day trendline caught last week's Apple-related slip. Overhead, though, the $14.40-$14.50 neighborhood has reemerged as a technical ceiling in recent weeks, having also contained AMD in June and mid-July.