Unusual Options Activity: Intel (INTC)

Shares of chipmaker Intel (INTC) have been trading in a range over the past year, with the stock price currently on the uptrend. One trader sees that move continuing in the next few weeks.

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  • That’s based on the April 22 $55 calls. With 25 days until expiration, 29,053 contracts traded compared to a prior open interest of 174, for a staggering 177-fold jump in volume on the trade. The buyer of the calls paid $0.66 to enter.

    The stock recently pushed to the $51.50 range, so shares would need to rise another $3.50 or about 7 percent for the call options to move in-the-money in the next month. With a 52-week high of $68, the option strike price is well placed for a one-month move.

    Intel shares jumped higher last week on the news that their foundry services could gain customers such as graphics processing giant Nvidia (NVDA). Otherwise, investors have largely shunned Intel for other chipmaker stocks amid a global shortage over the last year.

    Action to take: Investors may still like shares here. The stock trades for less than 11 times earnings, is still a global powerhouse even if it hasn’t grown or adapted as quickly as competitors lately, and the shares yield just over 3 percent right now.

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  • For traders, the April calls are an inexpensive play on shares moving higher in the next month. They can potentially yield triple-digit returns, given how the market is starting to rebound off its recent lows. That makes for an interesting speculation, but traders should look to take profits quickly.


    Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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