Why Intel Stock is Weighing on the Dow

Options players are flocking toward the equity

Assistant Editor
Jan 22, 2021 at 11:18 AM
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The shares of Intel Corporation (NASDAQ:INTC) are near the bottom of the Dow today, last seen down 8.4% at $57.42. This comes even after the semiconductor powerhouse reported fourth quarter earnings and revenue that bested Wall Street's forecasts, fueled by a strong demand for personal computers and laptops during the pandemic-laden year. It seems like the reason for today's plunge can be chalked up to a combination of profit-taking and an early-morning cyber hack to the company's corporate webpage.

Nevertheless, no fewer than 14 brokerage firms have issued bull notes, the loftiest of coming from J.P. Morgan Securities to $80. Coming into today, 17 of 28 firms sported "hold" or worse recommendations, which means Intel stock was well overdue for a round of upgrades. Today's slew of price-target hikes may not be the last, too, as INTC's average 12-month price target stands less than 2.9% above current levels.

The first month of 2021 has already been an eventful one for INTC. A bull gap launched the equity to as high as $63.95 by Jan. 21, essentially filling the sharp 16.2% post-earnings bear gap from July. Even amid today's breather, the shares are up 15% already in 2021. 

Options traders are ramping up their presence today. Already, over 124,000 calls and 84,000 puts have been exchanged so far -- total volume that's triple what's normally seen at this point. Most popular is the weekly 1/22 59-strike call, with new positions being opened there, followed by the 59-strike put from the same series. 

Now looks like a good time to weigh in on Intel stock with options amid a post-earnings volatility crush. The equity's Schaeffer's Volatility Index (SVI) of 39% sits in the low 19th percentile of its annual range. In other words, INTC currently sports attractively priced premiums.

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