Tony Zhang Sees Unusual Options Activity In Advanced Micro Devices

On CNBC's "Options Action," Tony Zhang said Advanced Micro Devices, Inc. AMD had six back-to-back sessions with a gain of more than 3% to 5%. It traded very actively on Wednesday as volume reached more than seven times the average daily options volume.

The stock closed 38% above its 200-day moving average and some mean reversion trades started to pop up in the options market. One particular trade was very interesting to Zhang. A trader bought 10,000 contracts of the October $115/$90 put spread for $7.50. The trade breaks even at $107.50 or around 9.5% below the closing price on Wednesday. If the stock drops to $90 at the October expiration, the trade is going to reach its maximal profit of $17.50.

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