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Intel Corporation (NASDAQ:INTC - 24.98) has been a bit sluggish in recent months, adding just 3% year-to-date, and trailing the broader S&P 500 Index (SPX) by roughly 8% over the past 60 sessions. What's more, the equity has closed the past three days below support at its 200-day moving average -- a trendline it had not breached since October.
It's no surprise that put players turned up the heat on INTC yesterday, as approximately 206,000 of these options changed hands, nearly quadrupling its average daily volume -- and more than doubling the number of calls traded. Digging deeper into the data, it appears that one trader closed his July 26/28 bear put spread on INTC for a net credit of $1.88.
But the put action didn't stop there. Just 30 minutes later, a trader -- perhaps the same one closing his July spread -- sold 36,000 puts at the October 19 strike, while simultaneously purchasing an equal number of puts at the October 24 strike, resulting in a net debit of $0.90. (The fact that open interest soared at both strikes overnight underscores our suspicion of new positions.) In other words, the trader may have rolled his spread strategy down and out, thus strengthening his bearish stance. In order for him to collect the maximum reward of $4.10 from this play (the difference between the strike prices, minus the net debit), the stock must retreat beneath the breakeven of $23.10 (bought put strike minus net debit) by October expiration. Conversely, his potential risk is limited to the net debit paid.
Thursday's put volume marks a change of pace for the tech concern. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 1.73 for INTC, confirming that calls bought to open have almost doubled puts during the past two weeks. This ratio arrives in the bullishly skewed 69th annual percentile, signaling that traders have been picking up calls over puts at an accelerated clip. However, it should be noted that short interest on the stock ramped up by about 21% during the past month, implying that some of the recent call volume could be the result of hedging activity by short sellers. Even so, the equity's bearish camp is far from crowded, as these shorted shares account for just 2.4% of INTC's float.
It also bears mentioning that the company is slated to reveal its second-quarter earnings on Tuesday, July 17, and has bested analysts' bottom-line projections in each of the past four quarters. If history is any indication, another positive earnings report could send the aforementioned skeptics running for the exits.