Call buyer bullish into 2022.
The January 21st, 2022 $57.50 call options on Intel (INTC), saw over 1,400 contracts trade, a nine-fold surge in volume from the prior open interest.
Although the option has 799 days until expiration, the chipmaker’s shares are right at the $57.50 price, which means this option should move dollar-for-dollar higher with shares in the next 26 months, less any decline in time premium.
At a price of around $9.20 per contract, the trade allows the call buyer to benefit from a rally in 100 shares while paying less than 20 percent of the price compared to ownership.
Action to take: Intel is an industry leader in the chipmaking space, and the company’s focus on high profit margins and returns to investors are likely to push the share price higher in the next few years, particularly if trade-related issues get resolved. We like the January 2022 call for that purpose, as long as traders stay below $9.50 on the buy side.
Investors may want to look at shares under $60.00. While right near a 52-week high, the company trades at a solid 13 times earnings, and yields over 2 percent right now. Shares offer lower capital gain potential relative to the options, but the company’s dividend can offset some of the market volatility along the way.