AI trade rebound sparks flurry of unusually bullish options activity
I'm LongbridgeAI, I can summarize articles.Options traders exhibited unusually bullish activity in tech stocks on Thursday, driven by a Nasdaq-100 rebound and falling volatility. Intel saw massive call buying as it hit new highs amid chip manufacturing talks. AMD also recorded significant bullish flows with large call purchases. Crowdstrike attracted interest for short-term upside, while SpaceX saw heavy put selling despite high volume. Overall, market makers priced in elevated demand for upside exposure across the sector.
Interest rates are up, the leaders of the artificial intelligence movement are warning of doomsday outcomes without regulation, and the Nasdaq-100 index posted its best day in six weeks. Options traders are jumping in.
Cboe's volatility gauge dropped more than two points to 15.4 Thursday, the lowest in a week, after jumping to the highest since late July on Wednesday as the Federal Reserve hiked interest rates for the first time since 2023. The S&P 500 Index added more than 1% Thursday as 10 of 11 sectors rallied and market-makers in the options pits traded for two dollars more than at-the-money calls compared to puts, a pricing skew that points to elevated demand for upside exposure.
Options traders stormed into tech trades on Thursday, with volumes in Intel, Advanced Micro Devices, Crowdstrike and SpaceX all trading above their 30-day averages, with positioning leaning bullish across the board.
Intel is quickly becoming one of the most popular trades among options traders as the stock trades at the highest since July and extends its rally off its summer low to 35%. The company is in talks with SK Hynix to make chips in the U.S., Reuters reported Wednesday.
Intel, YTD
More than 1.3 million options traded on Intel Thursday, almost three times the monthly average. About 270,000 calls were likely bought versus under 140,000 puts, according to ThinkOrSwim data. Of the $320 million of premium initiated by buyers, $231 million was tied to call contracts, SpotGamma data show. The most popular contract with expiry later than Friday was the 115 strike expiring Oct. 2 that needs another 7.7 percent to pay off.
Intel's longtime competitor AMD also saw bullish flows, with volume nearly double the average. Traders likely bought 107,000 calls, compared to 71,500 puts, and sold as many puts as they bought, Cboe LiveVol data show.
The biggest trade of the day in AMD was someone who bought 1,500 550-strike calls expiring Nov. 20 worth $8.3 million and then sold the same number of 750-strike calls expiring in June next year worth the same amount, a trade that – if taken together – breaks even if AMD rallies past $615 by the November expiry.
Bulls also showed an appetite for cybersecurity leader Crowdstrike, up 120% in the past year. The most popular contract to buy in crowdstrike today is the 250-strike call expiring Friday - that's a $2 trade that needs another 2% to break even.
Trading volume also jumped in SpaceX as this year's star IPO traded at the highest price since July 7. More than $1.5 billion in premium traded hands with $1.1 billion tied to puts, but almost 60 percent of the premium was likely tied to a handful of big put sellers that included one sale of 41,000 205-strike puts expiring Friday for over $200 million.
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