Chart of the Day – $INTC: Gathering Intel

by Dan March 9, 2015 12:15 pm • Chart of the Day• Commentary

Despite the SOX (Philadelphia Semiconductor Index) having recently broken out to a new all time high last month, Intel (INTC), its largest component at 17% of the weight has demonstrated declining momentum since making new 14 year highs in December and is now down 10% on the year.  The stock is quickly approaching important near term support, just as it has broken below its 200 day moving average:

INTC 2yr chart from Bloomberg
INTC 2yr chart from Bloomberg

Its not just the technical set up that has caught my eye, but put volume today is almost 2x average daily, and its only noon. The most active strikes on the day are 12,000 of the March 32.50 puts, 11,000 March 31.50 puts, 8,000 of the April 2nd weekly 32 puts and 7,500 of the March 33 puts, many bought to open.  The largest block on the day was a buy of 4.000 March 31.50 puts when the stock was $32.53, which break-even at $31.28 down almost 4% in 9 trading days.

All of this buying has caused short dated options prices to move up a few points as expected:

INTC 1yr chart of 30 day at the money implied vol from Bloomberg
INTC 1yr chart of 30 day at the money implied vol from Bloomberg

So why the flurry of activity?  Some of you may remember when INTC used to hold mid quarter updates, tightening up their previous guidance range for investors, which used to come the first week of the third month of the quarter. Is it possible that there are rumblings of a negative pre-announcement? This would not come as a huge surprise given the continued strength of the dollar, and some of the recent commentary about the health of the PC market, specifically the take-away’s from Microsoft’s guidance in late January.  INTC is scheduled to report their Q1 results on April 14th after the close.

The put buying in short dated strikes that don’t catch earnings are curious, basically it appears that traders are looking to get the most bang for their buck, and its the April 2nd weekly 32 puts that were bought to open in two blocks of 1895 for .56 and .57 that really put my antennas up for the potential for a pre-announcement.  Stay Tuned.