Advanced Micro Devices stock (AMD) has been in a major down trend since October.
AMD stock is down 51% from its 52-week high and 30% in the last three months.
The stock rallied 2.57% yesterday, but based on the options flow, this seems more like short covering that the start of a new bull trend.
Let's break down the unusual options flow and what it might signal about the stock's potential direction.
Options Volume and Flow Analysis
Yesterday’s options activity in Advanced Micro Devices stood out from typical trading patterns. The unusual volume and flow indicate potential bearish sentiment among sophisticated options traders.
Specifically, we saw:
- $22.29m in bearish flow vs $12.48m bullish flow – almost a 2:1 bearish bias.
- Massive deep ITM put positions:
- $170 Put (June 2025, 108 DTE): $9.94M premium, delta -0.9782.
- $160 Put (June 2025, 108 DTE): $5.04M premium, delta -0.9495.
- $130 Put (April 2025, 44 DTE): $2.87M premium, delta -0.9493.
- $100 Put (April 2025, 44 DTE): $1.30M premium, delta -0.9557.
Technical Picture
AMD has been in a persistent downtrend, trading below its 21-day, 50-day, and 200-day moving averages.
The stock closed at $100.75, significantly below the 50-day moving average and the 200-day moving average, reinforcing its bearish trend. The 21-day moving average is acting as near-term resistance.
AMD saw a 54M volume day, slightly above average, suggesting some buying interest. However, the Accumulation/Distribution line remains weak, indicating continued distribution by institutions.
Support is around $95, while resistance is at $109 (21-day moving average). A break above this could signal a potential trend reversal.
With RSI at 33.69, AMD is nearing oversold conditions, suggesting a possible short-term bounce.
However, the overall trend remains bearish unless it reclaims key moving averages.
Trading Implications
The combination of the bearish options flow sentiment and RSI divergence presents a compelling case for AMD shareholders to consider bearish option strategies.
The technical setup for AMD remains bearish, and today's options flow further confirms a negative bias.
The stock is trading well below key moving averages, with resistance at the 21-day moving average and support near $95.
The RSI at 33.69 suggests oversold conditions, but a lack of strong accumulation signals that downside pressure could persist.
The options market reflects significant bearish sentiment.
There is heavy put activity, particularly in strikes ranging from $95 to $170, with large premium trades on contracts expiring in April and beyond.
Notably, high open interest and volume on deep in-the-money puts suggest hedging or outright speculative bearish positioning.
Implied volatility is also elevated, indicating increased demand for downside protection.
Given this setup, traders should be cautious of further weakness.
A break below $95 could trigger additional selling pressure, while a short-term bounce may face resistance at $109.
Those looking to trade options might consider bear put spreads or selling call credit spreads to capitalize on continued bearish momentum.
Company Details
The Barchart Technical Opinion rating is a 100% Sell with a Strengthening short term outlook on maintaining the current direction.
Long term indicators fully support a continuation of the trend.
The market is approaching oversold territory. Be watchful of a trend reversal.
Advanced Micro Devices rates as a Strong Buy according to 28 analysts with 1 Moderate Buy rating and 13 Hold ratings.
Advanced Micro Devices offers the industry's broadest portfolio of leadership high-performance and adaptive processor technologies, combining CPUs, GPUs, FPGAs, Adaptive SoCs and deep software expertise to enable leadership computing platforms for cloud, edge and end devices.
Please remember that options are risky, and investors can lose 100% of their investment.
This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.
