Options Traders Bet Against Intel Stock Despite Chart Support

Data suggests it would make more sense to buy premium on INTC than sell it

Aug 14, 2017 at 11:30 AM
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With fellow chip stock Nvidia reporting earnings last week, Dow component Intel Corporation (NASDAQ:INTC) has taken a back seat lately. But following a well-received earnings release just a few weeks ago, there appear to be a number of reasons to keep INTC stock on the radar going forward. Below, we'll break down noteworthy chart levels and options activity on Intel. 

Intel Stock Tests Key Chart Levels

Shares of Intel certainly haven't lit it up this year. In fact, at $36.30, they're only pennies above their year-to-date breakeven level. INTC is currently trading above two other notable technical levels, as well. The $35.84 level corresponds with a 23.6% Fibonacci retracement of the stock's 2016 lows and highs. The shares' 12-month moving average also sits in this region. Considering all this, it would seem the equity is on solid technical footing, especially when you consider it's been one of the best stocks to buy following a volatility spike. 

intel stock

Call Sellers Pound INTC

Looking to the options pits, Intel traders have shown a strong preference for calls -- but that doesn't mean everyone's bullish. For example, while call buying has more than doubled put buying during the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), call selling has actually outpaced all other strategies during this time frame. 

One strike the represents this mix of activity better than any other is the August 37 call, which is second on INTC's list of top open interest positions. Data shows a near-even split of buy- and sell-to-open activity here, so while some traders are betting on the semiconductor issue to top $37 before the options expire at this Friday's close, others expect this level to act as a short-term ceiling. 

The most active option during the past two weeks was the September 36 call, due to heavy sell-to-open action. Call writers also heavily targeted the September 37 strike, and the December 38 strike. Even the January 40 call, third on Intel's top open interest position list, has seen mostly sell-to-open activity. 

Anyone looking to bet bearishly on the blue chip may want to consider buying puts instead, however. This is because INTC has a Schaeffer's Volatility Index (SVI) of 17%, ranking below 83% of readings from the past year. In other words, volatility expectations are unusually muted on near-term options at the moment, so it would seemingly make more sense to buy premium than to sell it. 

 

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