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Trading volume is running at twice its typical intraday pace in Intel Corporation's (NASDAQ:INTC) options pits today. Contrary to what we've seen in recent sessions, puts are especially popular, with roughly 48,000 crossing the tape, compared to 41,000 calls.
The most active strike so far is the October 20 put, where 94% of the 14,648 contracts traded have crossed on the ask side, suggesting they were purchased. Implied volatility is up 2.6 percentage points, as well, hinting that the puts were freshly initiated -- a theory that data from the International Securities Exchange (ISE) confirms. Moreover, most of the top trades at the strike -- which included blocks of 2,000- and 3,000-plus contracts -- occurred simultaneously, so it's likely a single bearish speculator is behind most of the volume.
In any case, today's speculators paid a volume-weighted average price (VWAP) of $0.14 to enter their long put positions. Therefore, in order for them to profit, they need the shares of INTC to descend from their current position of $22.67, to $19.86 (strike price less the VWAP) by back-month options expiration. If Intel remains north of the strike price through the close on Oct. 18, however, the most the traders can lose is the initial premium paid.
Technically speaking, Intel Corporation (NASDAQ:INTC) is a long-term laggard, having shed more than 7% during the previous 52 weeks. What's more, on a relative-strength basis, the tech concern has trailed the broader S&P 500 Index (SPX) by nearly 12 percentage points through the past three months.
Also notable is the fact that INTC is scheduled to report third-quarter earnings after the close on Oct. 15, just days before the aforementioned puts expire. Although the stock has beaten or met analysts' expectations in seven of the last eight quarters, it has lost an average of 1.2% in the three days following its quarterly results announcements. For the third quarter, Wall Street is calling for per-share earnings (excluding items) of 55 cents -- slightly lower than the company's year-ago figure.
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