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Intel Corporation (INTC) Option Traders Eye a Quick Retreat

Intel Corporation's weekly 6/6 36.50-strike put was in focus on Tuesday

by 5/28/2014 9:52 AM
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Option traders have been increasing their bearish exposure to Intel Corporation (NASDAQ:INTC) in recent weeks, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Since May 1, the equity's 10-day put/call volume ratio on this trio of exchanges has grown to 0.87 from 0.40, and currently ranks in the 79th percentile of its annual range. Simply stated, puts have been bought to open over calls at a faster-than-usual clip of late.

This accelerated demand for INTC puts was witnessed on Tuesday, with the contracts trading at a 29% mark-up to what is typically seen. Short-term options were in focus, as evidenced by the stock's 30-day at-the-money implied volatility (IV), which jumped 7.5% to 13.6%. Although INTC has rallied nearly 14% since hitting a year-to-date low of $23.50 on Feb. 5, a number of speculators rolled the dice on a quick retreat for the tech stock.

Specifically, INTC's weekly 6/6 26.50-strike put saw the most action on Tuesday. Of the 3,980 contracts traded here, 98% went off at the ask price, pointing to buyer-driven activity. Meanwhile, IV rose 2.6 percentage points, and open interest added the most of any other strike, collectively pointing to the initiation of new positions. Amid yesterday's 1.6% rise for INTC, delta on the put plunged to negative 0.36 from negative 0.63, suggesting a declining chance the option will be in the money at expiration.

As touched upon, Intel has been making steady strides in recent months, with the equity last seen lingering near $26.71. What's more, on a relative-strength basis, INTC has outperformed the broader Dow Jones Industrial Average by roughly 5 percentage points since hitting their respective Feb. 5 intraday lows.

Off the charts, Intel Corporation (NASDAQ:INTC) announced this morning it has entered a partnership with China's Rockchip, in hopes of expanding its presence in Asia. Stateside, INTC -- along with three other Silicon Valley bigwigs -- last week agreed to pay $324.5 million to settle a hiring lawsuit, originally filed in 2011.


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