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Intel Corporation (NASDAQ:INTC) has suffered along with most of its blue-chip peers this week, and has given up 0.5% to $21.93 so far today. The options crowd is rolling the dice on more downside for the tech concern, with puts flying off the shelves at twice the normal rate.
In early afternoon action, INTC has already seen 83,000 puts cross the tape -- more than doubling its average intraday volume of around 28,000 puts. Meanwhile, just 41,000 INTC calls have changed hands thus far.
Most popular by a mile has been the October 21 put, where nearly 31,100 contracts have crossed at a volume-weighted average price (VWAP) of $0.44. Ninety-three percent of the puts traded on the ask side -- mostly in several large blocks within the first hour of the session -- and volume has surpassed open interest at the strike, hinting at freshly bought bearish bets.
By purchasing the puts to open, the buyers expect INTC to breach $20.56 (strike price minus VWAP) by options expiration on Oct. 18. From current levels, the stock would need to drop about 6.9% in order to perforate breakeven. Should INTC remain north of the strike through the options' lifetime, the most the buyers stand to lose is the initial premium paid for the puts.
Today's preference for puts marks a change of pace for INTC, as calls have been the options of choice among buyers of late. The stock's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 2.09, indicating that speculators have scooped up more than two INTC calls for every put during the past two weeks. This ratio stands higher than 78% of all comparable readings of the past year, pointing to a healthier-than-usual appetite for optimistic positions.
Furthermore, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.74 tells us that calls outnumber puts among options with a shelf-life of three months or less. This ratio is higher than just 10% of all other readings oftaken within the last 12 months, suggesting near-term traders are more call-biased than usual right now.
It's worth noting, though, that short interest edged 3.1% higher during the past month, and now represents nearly a week's worth of pent-up buying demand, at INTC's average pace of trading. Against this backdrop, it's possible that some of the recent call purchases -- especially those of the out-of-the-money variety -- are attributable to hedging activity among the shorts.
Technically speaking, Intel Corporation (NASDAQ:INTC) has surrendered 15.6% since touching a year-to-date high of $25.98 in early June, ushered lower beneath its 10-day and 20-day moving averages. What's more, the stock is in danger of ending a second straight session south of its psychologically significant 200-day moving average.