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Are Intel Corporation (INTC) Bulls Buying Options Insurance?

Intel Corporation speculators purchased long-term puts

by 2/19/2014 9:33 AM
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Option Brief: Intel Corporation (NASDAQ:INTC) is up 5.3% since dipping to $23.52 on Feb. 5, with the shares closing at $24.76 on Tuesday. The stock is now attempting to secure a spot back atop its 80-day moving average -- which acted as support in late November and early December -- and option traders are either gambling on (or hedging against) a long-term pullback.

More than 6,900 January 2015 22-strike puts traded yesterday, primarily at the ask price, suggesting they were bought. Plus, open interest at the strike skyrocketed by more than 5,250 contracts -- the most of any strike -- pointing to new positions.

By purchasing the out-of-the-money puts to open, the buyers have one of two motives: to profit on a retreat south of $22 within the next several months, or to "insure" their INTC shares. In the case of the latter, the traders hope INTC continues its recent uptrend, but purchased the puts to lock in an acceptable exit price ($22 per share), should Intel Corporation (NASDAQ:INTC) stage a significant decline before January 2015 options expiration.


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