Intel (INTC) Outside

by Dan October 3, 2017 1:36 pm • Trade Updates

On Friday afternoon we updated our bullish view on shares of Intel (INTC) and highlighted the fact that the stock might be poised for a rally causing a multi-year breakout into their upcoming Q3 earnings announcement on Oct 26th (read here). We opined that options prices appeared dollar cheap and that we were inclined to roll our long stock position into a long call position:

With the stock at $38.05, the Oct 27th weekly 38 calls are offered at 85 cents or about 2.2% of the stock price. The fact that they are 5 cents in the money makes the upside breakeven of $38.85 up only 2%! That is a pretty decent risk-reward and an attractive long stock replacement at long-term technical resistance in front of an event with an uncertain outcome.

I spoke about this idea on CNBC’s Options Action on Friday (click below):

Shares of INTC have been on a tear this week, up about 4% and the Oct 27th weekly 38 calls that closed Friday at 85 cents can now be sold at $1.90 for a $1.05 gan with the stock at $39.65. At this point, I think it makes sense to roll this trade up and out playing for further gains but taking the initial premium off of the table.

Action: Sell to Close 1 INTC Oct 27th weekly 38 call at $1.90 for an 85 cent gain (the initial premium outlay)


Buy to Open 1 INTC Nov 40 call for 85 cents (locking in a 20 cent profit on the trade, while leaving the potential for further upside with nearly 4 more weeks).
New Break-Even on Nov expiration: Profits above $40.85