Unusual Options Activity: Intel (INTC)

 Intel (INTC)

Traders bet on massive rally in the first half of 2020.

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  • July 2020 $65 call options on Intel (INTC) saw a 19-fold increase in volume. Going from 213 to over 3,900 contracts, the bet is that shares will continue their rally.

    The recent price for shares around $57.50 relative to the option strike price indicates a 13 percent move higher in the next 210 days before expiration.

    The traders paid around $1.55, or $155 per contract.

    Any move closer to the strike price in the next few weeks could lead the option to surge well before the time premium runs out, otherwise the trader will need shares to hit at least $66.50 to profit at expiration.

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  • Action to take: The recent surge in technology stocks is giving that sector a boost to catch up with the value stocks that dominated the market in 2019, and some traders are betting on a rally that will last for years.

    It’s a trend likely to continue, as tech stocks look reasonably valued after a few years of under-performance here. This trade has enough time to play out and provide speculators with a double or better, so we like it.

    Stock investors shouldn’t shy away from shares here, either. Even near 52-week highs, the industry-leading chip maker trades at less than 14 times earnings and yields over 2.2 percent, providing both growth and value at a reasonable price.

    Shares are a buy up to $60.

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