Advanced Micro is on fire.
Shares of the chipmaker have soared more than 130 percent since January, making it the best performing stock in the S&P 500 this year. However, one trader is betting AMD's hot run is about to cool off.
AMD was up nearly 7 percent on Friday morning, extending its gains following a price target increase by Rosenblatt Securities on Thursday. According to "Options Action" trader Mike Khouw the move sparked a flood of options activity in the name.
"AMD is always a very busy stock when it comes to the options market and trades quite a lot," Khouw said Thursday on CNBC's "Fast Money." "We did see double that average options volume [Thursday]." Khouw noted that while many of the options contracts targeted short-term moves to the upside, one trader made a million-dollar bet that AMD has reached a top.
On Thursday, a trader purchased 6,000 of the Feb. 21 puts for $2.26 per contract. Since each options contract counts for 100 shares of stock, this is a more than $1 million bet that shares of AMD will fall below $18.74, or down about 15 percent in the next six months.
Despite AMD's massive run, the stock is still down more than 50 percent from its all-time closing high of $48.50 back in 2000.
Khouw also noted that while the trader's bearish bet could fall through, the broader options market is still implying a double-digit move of 30 percent in either direction between now and February expiration.
Shares of AMD were trading higher on Friday morning, around $23.70.