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Intel Corporation (NASDAQ:INTC) is surging this morning, up 6.5% to rest at $33.79, after earlier hitting a fresh 10-year peak of $33.95. Sparking the rally was a second-quarter earnings beat, and subsequent flood of bullish brokerage notes from no fewer than 20 analysts. Not surprisingly, calls are the options of choice among INTC traders, with volume running at nine times the usual intraday pace.
While the October 33 call is seeing possible sell-to-close activity, the August 34 call is apparently being sold to open, as traders gamble on a short-term ceiling for INTC. In a nutshell, the call writers are hoping the equity remains below $34 through the close on Friday, Aug. 15, when back-month options expire. If that happens, the traders will retain the initial premium collected as their maximum potential profit. If it doesn't -- and Intel Corporation (NASDAQ:INTC) surges past the strike -- the sellers will be at risk of assignment, and potentially unlimited losses.