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Weekly Bullish Bets Mounting on Intel Corporation (INTC)

Investors are betting on INTC to rally by Friday

by 5/6/2013 2:02 PM
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Having picked up nearly 15% in the past month -- and with the acquisition of Stonesoft Oyj by its software security subsidiary McAfee, Inc. -- Intel Corporation (NASDAQ:INTC) is being targeted by the bulls today.

One of the more active spots this morning has been at the weekly 5/10 24.50-strike call, where roughly 6,000 option contracts have been traded. With 92% going off at the ask price, volume outpacing open interest, and implied volatility gaining nearly 5 percentage points, it's a safe bet to assume these calls have been bought to open.

The volume-weighted average price (VWAP) of the weekly call options is $0.06. Hence, investors are hoping for the shares of INTC to rally above $24.56 by this Friday's expiration date -- just 2.7% from the stock's current perch at $23.92. But even if they don't, the most these traders have to lose is the premium they paid to enter their long call position.

Today's bullish sentiment in the options pits flies in the face of opinions held among the brokerage bunch. Of the 36 analysts who have ratings on Intel Corporation, 26 maintain a "hold" or worse rating. Additionally, short interest makes up nearly 5% of the stock's total float. It would take over a week to buy back these shorted shares at INTC's average daily trading volume -- which, from a contrarian perspective, equates to plenty of sideline cash available.

Should Intel Corporation (NASDAQ:INTC) sustain its bullish price action, a round of analyst upgrades -- such as last Friday's move by Lazard -- or a capitulation among short sellers could put the weekly 5/10 24.50-strike call in the money.


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