According to a study from Schaeffer’s Senior Quantitative Analyst Rocky White, AMD just came within one standard deviation of its 40-day moving average after a lengthy period above the trendline. White’s modeling shows six similar signals occurring in the past three years. One month after these signals, AMD was higher half of the time, and averaged a one-month return of 4.7%. A similar move from AMD’s current perch at $81.80 would put the equity at $85.65 — back north of its 30-day moving average.
The stock could benefit from a round of analyst upgrades, too. Currently, 13 analysts call AMD a “buy” or better, while 11 still say “hold.” Plus, the consensus 12-month price target of $78.08 is a 4.6% discount to current levels.
The options pits are flashing a preference for calls across the board. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 3.25 calls were picked up for every put in the last 10 weeks. This ratio sits higher than 86% of readings from the past 12 months, indicating an unusually heavy appetite for long calls of late.
Considering this, speculating on Advanced Micro Devices stock’s next move with options looks like a prudent play. The stock’s Schaeffer’s Volatility Index (SVI) of 60% stands higher than 27% of readings from the last year. This means options traders are pricing in relatively low volatility expectations for the time being.
