Intel, QUALCOMM Options in Demand After iPhone Chip Deal

Intel Corporation (INTC) just signed an iPhone chip deal with Apple Inc. (AAPL), burning rival QUALCOMM, Inc. (QCOM)

by Alex Eppstein

Published on Jun 10, 2016 at 2:14 PM
Updated on Jun 24, 2020 at 10:16 AM

Semiconductor stocks are in focus today, and while blue chip Intel Corporation (NASDAQ:INTC) is edging higher, rival QUALCOMM, Inc. (NASDAQ:QCOM) is down sharply. Options traders are responding to the respective moves, too, as we'll examine below.

At last check, INTC is bucking the Dow's downward drift, thanks to a reported deal with Apple Inc. (NASDAQ:AAPL) to supply chips for the AT&T Inc. (NYSE:T) version of the iPhone. Specifically, the chipmaker's stock is 0.9% higher at $32.22, and approaching its year-to-date peak. For 2016, however, the shares have surrendered 6.5% -- and current levels may again translate into resistance.

At the moment, INTC stock volume is the third highest on the Nasdaq, with more than 25 million shares traded. Intraday options volume is also accelerated, at double the expected levels. Several options may be seeing buy-to-open activity, including the weekly 6/10 32-strike and June 32.50 calls -- suggesting traders foresee upside through the respective expirations, at tonight's close and next Friday.

It's pretty typical for short-term traders to prefer INTC calls over puts. Specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) rests at 0.80, in the 27th annual percentile. Also, now is an opportune time to buy premium on near-term strikes. Intel Corporation's Schaeffer's Volatility Index (SVI) sits at an annual low of 16%, suggesting volatility expectations are relatively muted.

Turning to QCOM, the semiconductor stock is reeling on INTC's deal with AAPL, due to the loss of potential business. At last check, QCOM stock was down 2% at $53.90, and testing its 30-day moving average.

Not surprisingly, put options are crossing the tape at twice the usual intraday levels. In particular, traders may be buying new positions at the June 54.50 and 55 strikes, counting on additional downside through front-month expiration at the end of next week.

Put buyers have been pouncing on QUALCOMM, Inc. lately -- and doing so on the cheap. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 0.63 ranks above 74% of all other readings taken in the last year. Likewise, QCOM's SOIR of 0.86 sits just 17 percentage points from an annual peak.

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