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Calls have emerged as the options of choice on Intel Corporation (NASDAQ:INTC) today, as approximately 24,000 contracts have switched hands thus far. This is a 34% increase over the norm, and almost double the number of puts traded. Counter to last Friday's put-biased activity, it looks as though a number of speculators may be counting on a near-term advance for the tech concern.
Most active is the September 23 call, which has seen almost 8,000 contracts cross at a volume-weighted average price (VWAP) of $0.25. The majority of the calls went off at the ask price, and implied volatility has ticked higher -- underscoring our theory of fresh bullish bets. If these contracts were, in fact, bought to open, the traders are wagering that INTC will ascend past the breakeven rail of $23.25 (strike price plus the VWAP) by front-month expiration. This would entail a rise of 4% from the equity's present perch at $22.35.
Meanwhile, nearly 5,900 contracts have traded at the weekly 8/30 22.50-strike call -- 95% of them at the ask price, suggesting they were purchased. Again, implied volatility has climbed 3.0 percentage points, hinting at the addition of new positions. Additionally, data from the International Securities Exchange (ISE) confirms the presence of buy-to-open activity at this strike. In this scenario, call buyers will profit with each step INTC takes north of $22.63 (strike plus the VWAP of $0.13) by this Friday's close, when these weekly options expire. With a delta of 0.39, the options market is forecasting a 39% chance that this call will arrive in the money in the next two-and-a-half days.
However, even if the stock fails to climb high enough to reward either group of speculators, the most they risk losing is the initial cash outlay. Given Intel's relatively robust short-interest ratio of 8.5, however, it is possible that some of today's call buying could be the work of short sellers hedging their bearish bets ahead of the long weekend. Whatever their motive, today's traders may be looking to take advantage of INTC's inexpensive near-term options prices, as the stock's Schaeffer's Volatility Index (SVI) of 21% ranks lower than all but 28% of comparable readings collected within the past year.
Intel Corporation (NASDAQ:INTC) has been sluggish on the technical front, advancing a modest 8.4% so far this year, while declining 10.6% during the past 12 months. What's more, the shares have fallen 14% since tagging a new annual high of $25.98 on June 4, and have trailed the broader S&P 500 Index (SPX) by 13.5 percentage points during the most recent 60-day time frame.