Huge, Unusual Intel Options Volume Today Ahead of Earnings This Week
An Intel sign out front of a corporate office by wolterke via Adobe Stock Today, there is a large tranche of in-the-money Intel Corp (INTC) call options. Investors are playing volatility ahead of earnings, due to be released on Thursday, July 23, after the market close. INTC is up over 3.7% today at $99.24 in…
An Intel sign out front of a corporate office by wolterke via Adobe Stock
Today, there is a large tranche of in-the-money Intel Corp (INTC) call options. Investors are playing volatility ahead of earnings, due to be released on Thursday, July 23, after the market close.
INTC is up over 3.7% today at $99.24 in midday trading. I discussed Intel’s upcoming earnings today and a high-yield short-put play in my earlier Barchart article, “Intel Stock Is Down, But Put Premiums are High – Put Short Sellers Love the High Yields.”
More News from Barchart
INTC stock – Last 6 months – Barchart – July 20
The gist of my article is that INTV looks too cheap. That could be why some institutional investors are buying huge volumes of in-the-money (ITM) calls at $80.00 today. They expire in two days, July 22, just ahead of the earnings release.
There have been over 7,200 call options traded at $80.00 expiring July 22, which is 57x the prior number of contracts outstanding.
This can be seen in the Barchart Unusual Stock Options Activity Report. It shows that the ask price is $18.35, so an investor buying these ITM calls has a breakeven point of $98.35.
INTC calls expiring July 22 – Barchart Unusual Stock Options Activity Report – July 20
However, as of this writing, the ask price is $18.95, bringing the breakeven point to $98.95 ($80 +$18.95). That is still below the stock price, so the investor buying these calls can exercise them and make a profit:
$99.24 – $98.85 = $0.39
That represents a 2-day return of 0.4875% (i.e., $0.39/$80). If this could be repeated 15x this month, or every 2 days, the monthly expected return (ER) would be 7.3125%. That’s a very attractive ER.
However, investors should note that by the time this article comes out, the premium could have risen. So, be careful in copying this trade.
Intel Price Targets
My July 20 Barchart article earlier today on Intel shows how INTC stock could be worth between $105.76 and $149.00 over the next 12 months to next year, or an average of $127.38.
These are based on expected free cash flow (FCF) estimates I have derived using analysts’ Intel Corp. revenue forecasts and estimated FCF margins. Management has said they expect to be free cash flow positive by the end of the year, not including one Fab buildout.
Moreover, Wall Street analysts have similar high price targets (PTs). Yahoo! Finance shows an average of $106.70, and Barchart has a mean survey PT of $108.46. These are close to my lower price target of $105.76.
The bottom line is that Intel stock looks undervalued here.
Short-Put Plays
As a result, one conservative way to play this is to short Intel puts. That way, an investor can set a potentially lower buy-in point and also earn income while waiting.
I described this strategy in my earlier Barchart article today. I described how shorting deep out-of-the-money (OTM) puts can provide one-month 4.5% yields for a strike price that is 15% lower than Friday’s price.
The put premiums may be lower today now that INTC is moving up, but they still show high yields. For example, the Aug. 21 expiry $85.00 put strike price has a midpoint premium of 5.35 and the $90.00 put strike price has a midpoint premium of $7.23.
INTC puts expiring Aug. 21 – Barchart – As of July 20, 2026
That means a short-seller of this put option can make a one-month yield of 6.29% (i.e., $5.35/$85.00) with the $85.00 put and 8.0% (i.e., $7.23/$90.00) with the $90.00 put contracts.
These are very high one-month yields and provide the investors with much lower breakeven points:
$85 – $5.35 = $79.65, i.e., 19.3% lower
$90 – $7.23 = $82.77, i.e., 16% lower
That shows that these short-put plays offer investors attractive potential buy-in points. In fact, these premiums can be used to help offset purchases of deep in-the-money calls above.
For example, if an investor were to short the $90 put and collect $7.23, that could be used to offset the $18.35 call option premium, i.e., $11.12. So the net ITM purchase price would be $91.12 (i.e., $80 +$11.12), giving the investor a potential profit of $8.12, or $812. (i.e., $99.24-91.12) upon exercise.
So, based on the $9,112 cost, the $812 profit represents an expected ROI of 8.9% over two days. That represents an expected return of 133% if it can be repeated every 2 two days for a month.
That is a very profitable way to play INTC stock using out-of-the-money puts and in-the-money calls.
On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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