Update – Intel (INTC) July Call Spread

by Dan April 9, 2019 11:04 am • Trade Updates

One of my first trade ideas of the year on RiskReversal, and on Options Action (watch here) on January 4th, I detailed a bullish trade in chip giant Intel (INTC – Chip Rip?), which at the time was a fairly stark reversal from many of the bearish trade ideas I detailed throughout 2018 in the etf that tracks the Semiconductor group, the SMH.

When INTC was $47.50 back in early Jan I agreed with an Upgrade of the stock to a Buy rating from Merrill Lynch, and thought the stock could appreciate in the first half of the year to the high $50s, here was the trade idea:

-Buy to open 1 July 50 call for $3

-Sell to open 1 July 60 call at 60 cents

Now with the stock at $55.10, the July 50 calls can be sold at $6.10 for a $3.10 profit, and the July 60 call can be bought to cover for 90 cents for a 30 cent loss, or for a total of $5.20 for a $2.80 profit from the initial purchase price. At this point, with 3 months to expiration, with the stock at the mid-point of the $10 wide call spread, I think it makes sense to close this trade idea and take the profit and look to reposition into or out of their Q1 earnings report on April 25th, possibly looking for a trade that risks a portion of the profits from here on it, while locking some in. We will review and look at other trade ideas before earnings… but for now…

Action: INTC ($55.10) Sell to close July 50 / 60 call spread at $5.20 for a $2.80 profit.

After about a 30% rally from the Christmas lows, and the stock’s pause nears its 52-week highs the chart is starting to have a sort of double top look to it: