Intel Corporation (NASDAQ:INTC) made a splash at the Consumer Electronics Show yesterday, unveiling a button-sized computer and a "PC-on-a-stick." As such, the shares tacked on 2.1%. However, in options land, one trader placed a sizable downside bet.
Diving right in, a put ratio spread was likely initiated at the July 28 and 33 puts, according to Trade-Alert -- with one individual buying to open a 12,500-contract block at the higher strike, and selling to open 25,000 contracts at the lower to reduce his entry cost. In other words, this speculator anticipates INTC will descend below $33 by July options expiration, but remain above $28.
However, as Trade-Alert also points out, this trader maybe a shareholder using options to hedge against a downside move -- possibly fearing an earnings miss next Thursday evening. This theory is further supported by INTC's technical tenacity. The stock is up 2.4% this afternoon to trade at $36.88, bringing its year-over-year advance to roughly 46%.
Yesterday's preference for puts over calls has been typical among traders of late. INTC's Schaeffer's put/call open interest ratio (SOIR) of 1.31 ranks just 1 percentage point from an annual put-skewed peak. What's more, put buying is in vogue, as evidenced by the equity's 50-day put/call volume ratio of 1.11 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This reading has never been higher in the last 52 weeks. While some of these long puts may be hedges, a capitulation among "vanilla" bears could result in tailwinds for INTC.
Finally, while the aforementioned two-legged trade was sizable, Intel Corporation (NASDAQ:INTC) rival Advanced Micro Devices, Inc. (NASDAQ:AMD) saw an even bigger transaction. Specifically, 100,000 puts were bought to open for $3.5 million.