Stocks quoted in this article:
Option Brief: Traders are descending on Intel Corporation's (NASDAQ:INTC) options pits today -- especially on the call side, where 106,000 contracts are on the tape. This volume represents a 500% mark-up to the intraday average rate, and almost nine times the number of puts exchanged.
Most active is the October 30 call, where nearly 40,000 contracts have changed hands, compared to open interest of fewer than 4,000. A healthy portion -- including a 12,362-contract lot -- have traded at the ask price, as well. All in all, it's safe to assume that some of the deep out-of-the-money INTC calls were bought to open.
Most likely, the speculators have one of two possible motives in mind. On the one hand, with Intel shares up 1.4% to $25.16 today, the traders may be betting on an extended rally north of $30. On the other, with 4.3% of the stock's float sold short -- representing nearly two weeks' worth of pent-up buying activity, at average daily volumes -- it could be that short sellers are looking to hedge against a potential run higher using protective calls.
Technically speaking, Intel Corporation (NASDAQ:INTC) hasn't ventured north of $30 for roughly a decade. No matter what happens, however, today's call buyers can rest easy knowing that the most they have on the line is the initial premium paid.