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Last Tuesday, we looked at a bunch of weekly put option traders hoping for Intel Corporation (NASDAQ:INTC) to fall south of $23.38 by Friday -- a move that never materialized. The tenor toward INTC is significantly different in today's options pits, with the bulk of the trading revolving around out-of-the-money July and August 25 calls.
In the July series, more than 22,400 contracts have been traded, 99% of which went off at the ask price (including one block of 15,000 that changed hands around 1:00 p.m. for the ask price of $0.43 apiece). Implied volatility has inched higher, suggesting Intel bulls are buying these calls to open in the hopes that the semiconductor name will top $25.43 (the strike plus the premium paid) by the time July options expire.
Turning to the later-dated calls, of the 18,782 options traded at that strike so far, 17,000 changed hands in a single block trade around noon. The transaction went off at the ask price of $0.54 per contract. Again, with implied volatility shifting a couple notches higher, it appears that the trade was of the buy-to-open variety. Hence, the bullish bettor is anticipating that the shares of Intel Corporation will exceed $25.54 (strike plus net debit) prior to August options expiration. This represents a move of 6.4% from the equity's present position of $24.00.
The sizeable transaction flies in the face of the prevailing bearishness that surrounds INTC. Twenty-six of 36 analysts evaluating the stock slap it with a "hold" or worse rating. Meanwhile, the Schaeffer's put/call open interest ratio (SOIR) on the microchip maker is 1.33, which registers in the 99th annual percentile. This translates to the fact that open interest on options expiring within the next three months has rarely been as put-slanted during the past year as it is currently.
It's no wonder, either. Intel Corporation (NASDAQ:INTC) has lost nearly 2% in the past week, and close to 8% over the past 52 weeks. Plus, the shares -- which haven't traded above $25 since last August -- are now facing resistance at their 10-day moving average, which previously served as a level of support.
Statistically, based on the calls' respective deltas of 0.34 (34%) and 0.36 (36%), their chances of finishing in the money are slightly higher than 1-in-3. Yet, no matter what happens, the most today's bullish traders have to lose is the premium they paid at initiation.