Intel Corporation (INTC) Acquisition Met with Skepticism

Intel Corporation (INTC) has struggled to win the confidence of options traders

Jun 1, 2015 at 1:31 PM

ALTR
INTC

Intel Corporation (NASDAQ:INTC) is down 1.4% at $34, after the company agreed to buy Altera Corporation (NASDAQ:ALTR) for $16.7 billion in cash -- confirming earlier speculation. Meanwhile, intraday options volume has popped to 1.5 times the expected amount.

Seeing possible buy-to-open activity is INTC's July 34 put. By purchasing these at-the-money contracts, speculators anticipate the shares will breach $34 by the close on Friday, July 17, when back-month options expire.

This pessimism is reflected by longer-term data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, INTC's 10-day put/call volume ratio of 1.25 ranks in the 84th percentile of its annual range. Along the same lines, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.32 outstrips 96% of comparable readings from the past year.

Technically speaking, however, Intel Corporation (NASDAQ:INTC) has been trending upward over the long term. Year-over-year, the shares have advanced 25%, and even today's dip has been contained by their 160-day moving average -- a trendline that served as resistance in early 2015. Should INTC reverse higher, an unwinding of bearish options positions could translate to upside.

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