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Intel Corporation (NASDAQ:INTC) has tagged a handful of higher highs since taking a sharp bounce off its 20-day moving average last Thursday. This morning, in fact, the stock hit a fresh 10-year peak of $31.58 right out of the gate, before easing back to its current perch at $31.45. There's more room to run, according to one group of option players on Friday, who targeted a move to $34 over the next few months -- a level not explored by the tech titan since January 2004.
Specifically, the stock's October 34 call was the most active option on Friday, with 15,722 contracts on the tape at the close. A healthy portion of these went off at the ask price, implied volatility edged higher, and open interest soared over the weekend -- collectively inferring the purchase of new positions. What's more, data from the International Securities Exchange (ISE) confirms at least some of the activity was of the buy-to-open kind.
The out-of-the-money calls were scooped up for a volume-weighted average price (VWAP) of $0.32, making at-expiration breakeven $34.32 (strike plus VWAP). Gains are theoretically unlimited with each additional step north of here the stock takes, while losses are capped at 100% of the premium paid, should INTC settle south of $34 at the close on Friday, Oct. 17 -- when the options expire.
On the fundamental front, Intel Corporation (NASDAQ:INTC) is slated to step into the earnings confessional after tomorrow's close. The company has matched or exceeded analysts' bottom-line estimates in six of the past eight quarters. For INTC's second quarter, Wall Street is calling for a per-share profit of 52 cents -- a 13-cent improvement over the firm's year-ago results.