Intel (INTC) Inside Move?

by Dan February 6, 2018 12:26 pm • Trade Ideas

Over the last year, we have been bullish and long shares of Intel (INTC) on numerous occasions for a whole host of reasons (read here, herehere & here). The stock had been underperforming the broad market and the SOX in January after news of massive chip flaws, but the stock rocketed after their better than expected Q4 results on January 25th to a new 17.5 years high, before falling and filling in the entire 10% earnings gap in the last week and is now down nearly 6% on the year.

With the stock at $43.40, down from an intraday high of $50.85 on January 29th, I think there is a favorable risk-reward from the long side. To my eye there is good technical support between the recent lows just below $43 to the Q3 earnings gap near $41.50.

 

I am long the stock at $43.50 looking for a move back to the recent highs, but I want to layout a defined risk alternative that takes advantage of the sudden spike in volatility:

Trade Idea: INTC ($44) Buy the April 45 / 50 Call Spread for 1.50
  • Buy 1 April 45 call for 2
  • Sell 1 April 50 at .50

Break-Even on April Expiration:

Profits: up to 3.50 between 46.50 and 50 with max gain of 3.50 above 50

Losses of up to 1.50 between 45 and 46.50 with max loss of 1.50 below 45

 

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