AMD Options Signal $260 Call Contention as $1B Supercomputer Deal Fuels AI Bull Case

• AMD surges 5% on $1B U.S. supercomputer contract and OpenAI AI chip deal
• Options market shows 20,000+ open interest at $260 call strike ahead of Friday expiry
• Put/call ratio near equilibrium (0.92) but deep OTM puts at $150 suggest hedging activity

Here's the deal: AMD's options activity and technicals are painting a clear picture of a stock at a crossroads. The $260 call wall represents a critical inflection point - if the stock breaks above its 248.9 intraday high, this could trigger a wave of call buying that propels shares toward $280. But watch the $237.55 support level - a breakdown there would validate the bearish histogram on the MACD. The market is clearly pricing in AI-driven growth, but execution risks remain.

Call Buyers Are Betting on AI Breakouts

The options market is a goldmine of insight. Right now, 20,000+ contracts are open at the $260 call strike expiring this Friday, with another 14,000 at $250. That's not just noise - it's a wall of liquidity that could become a self-fulfilling prophecy. When you see this kind of call concentration, it means institutional players are positioning for a short-term pop. The $260 strike is especially telling because it's just 5% above current levels, suggesting traders expect a sharp move rather than a slow grind.

But don't ignore the puts. The $150 strike has 10,973 open puts, a deep out-of-the-money strike that's 35% below current price. This isn't typical retail panic - it's more likely institutional hedging against a black swan event. The put/call ratio at 0.92 shows balanced sentiment, but the extreme put strikes suggest some big players are preparing for a worst-case scenario.

The block trades add intrigue. That 1,500-contract AMD20251017C165 call purchase? That's a whale betting on a 50% move by October. Meanwhile, the AMD20250919P155 put buy shows someone's hedging against a 30% drop. These aren't random trades - they're strategic moves by players who see a clear path either up or down.

News Flow Validates AI Bull Case, But Risks Linger

The $1 billion U.S. supercomputer contract is a game-changer. When the government writes checks that big, it's not just revenue - it's validation of AMD's technology. Combine that with the OpenAI deal for MI450 chips and you've got a perfect storm for AI-driven growth. Lisa Su's emphasis on AI strategy during investor calls? That's not just spin - it's a roadmap for dominance in the next computing era.

But let's not ignore the cracks. The Adeia lawsuits could disrupt operations, and China's AI chip ban is a red flag for international expansion. And don't forget the recent driver issue that caused a short-term sell-off. These aren't just technical hiccups - they're execution risks that could derail the AI bull case.

The market's mixed reaction to Q3 earnings tells the story. Despite beating estimates and raising guidance, shares fell 2.7% post-earnings. That's classic profit-taking after a 118% year-to-date run. But the analysts aren't panicking - they're raising price targets to $300. That suggests the long-term story remains intact, even if short-term volatility is inevitable.

Actionable Trade Ideas for AMD

For options traders, the $260 call strike is your sweet spot. If AMD breaks above its 248.9 intraday high, consider buying the AMD20251017C260 call expiring this Friday. The 20,000+ open interest means there's liquidity, and the $260 strike is right at the psychological level where a breakout could trigger a cascade of call buying.

For a longer-term play, the AMD20251017C300 call has 14,032 open interest. This is a high-risk/high-reward bet - the stock would need to climb 22% to reach this strike, but if the AI narrative takes off, the reward could be massive.

Stock traders should watch the Bollinger Bands. If AMD holds above the middle band at $243.38, consider entering a long position with a target at $260. But set a stop-loss below the 237.55 support level. If the stock breaks below that, consider a bearish put spread using the AMD20251017P230 and AMD20251017P200 strikes.

Volatility on the Horizon

The next 48 hours will be critical. AMD needs to hold above $248.9 to validate the bullish case. A close above $255 would signal institutional buying, while a drop below $237.55 could trigger a wave of panic selling. The options market is pricing in a 30% chance of a $260+ move by Friday, but execution risks remain.

This is a stock at a crossroads. The AI bull case is strong, but execution risks and legal challenges could create volatility. For traders, the key is to position for both scenarios - have a bullish call strategy ready if the stock breaks out, and a bearish put spread in place if it breaks down. The market is clearly pricing in a big move - now it's just a question of which direction AMD will take.