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Option Brief: Intel Corporation (NASDAQ:INTC) has moved slightly higher since its Tuesday evening positive earnings surprise, and one large-scale option player made a big bet Thursday that these gains will continue. Overall, call volume was elevated in yesterday's trading, coming in at 71% above typical levels.
Most active was the out-of-the-money December 25 call, as one block of 15,500 contracts traded off the ask price of $0.22 per contract. Open interest surged overnight, suggesting the calls were purchased to open. Given that this traded in close proximity with blocks at the November 24 and 25 call strikes (both of which crossed near the bid price), it's possible the trader rolled a bullish position out one month. The long call is essentially now a bet that Intel will surge over the next two months from its current price of $23.88 above $25.22 (the strike price plus the premium paid). This is just shy of Intel's annual high of $25.98, reached in June.
One caveat: if this trader is actually a short seller (Intel boasts a short-interest ratio of 8.3 days to cover), then this trade would represent a large hedge against upside in the shares. Either way, the most at risk in this long call purchase is 100% of the premium paid, should Intel Corporation (NASDAQ:INTC) be trading south of the 25 strike at expiration on Dec. 20.
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