Options traders place big bets on AMD ahead of Xilinx acquisition

AMD and Xilinx will likely be assembly Wednesday to debate the main points of AMD’s proposed $35 billion acquisition of Xilinx, which is deliberate to shut by the top of the yr.

The big buy, which has been within the works since October, is designed to assist construct out AMD’s information middle capabilities within the years ahead. Options traders are betting that this assembly might get the businesses one step nearer to their merger.

Bullish choices exercise within the chip house is nothing new in current weeks. The SMH semiconductor ETF has gained 10% in simply the final month as provide shortages drive costs larger. In Monday’s session, although, loads of exercise was stock-specific, and AMD was a big winner.

“We noticed calls outpace puts by [a ratio of] about 3-to-1 in AMD today, and the most active options were the 82-strike calls that expire at the end of this week,” Optimize Advisors CIO Michael Khouw mentioned Tuesday on CNBC’s “Fast Money.” “Over 18,000 of those traded for about $1, and that means that the call buyers were risking about 1.2% [of the underlying stock price] to make bullish bets that the stock could go above that $82 strike by the end of the week.”

Those calls break even at $83, or simply about 2% larger than the place AMD closed Tuesday’s session. That is on no account an outlandish goal for the inventory to hit by Friday’s shut and sure displays the outcomes of any constructive final result from Wednesday’s assembly.

AMD was buying and selling barely larger in Wednesday’s session.


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