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Option Brief: Intel Corporation (NASDAQ:INTC) calls outnumbered puts yesterday, 34,000 contracts to 28,000. Nevertheless, the two most active strikes were on the put side of the fence, and one of these -- namely, the September 26 put -- saw the biggest positive open interest translation of any INTC strike, hinting at freshly initiated positions.
Looking more closely at the data, we notice more than 3,800 contracts traded at the out-of-the-money strike. However, nearly all of the puts changed hands at the bid price, suggesting they were sold to open. In other words, these option players took a neutral-to-bullish stance toward INTC over the next few months, rather than the bearish posture recently observed.
Specifically, the put writers expect the shares to remain above $26 -- which acted as a layer of support in April and May -- through the close on Friday, Sept. 19, when the aforementioned contracts expire. Should that occur, the puts will expire worthless, and the sellers will retain the initial premium collected as their maximum potential reward. However, if the stock tumbles below the strike during the next three months, the traders will be at risk of assignment, with potential losses accumulating all the way down to zero.
As noted above, Intel Corporation (NASDAQ:INTC) benefited from underfoot support in April and May. This month, however, the shares have exploded, largely thanks to a guidance-induced bull gap last week. Specifically, the equity has tacked on nearly 10% month-to-date to trade at $29.95.