Intel Options Bulls Disregard Downgrade

INTC stock is the worst Dow stock so far today

Jun 18, 2018 at 3:18 PM
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Intel Corporation (NASDAQ:INTC) is the worst Dow stock today, after Northland Capital Markets downgraded the chipmaker to "underperform" from "market perform," and slashed its price target to $45 from $53. The brokerage firm cited expectations for increased competition from Advanced Micro Devices (AMD) and Nvidia (NVDA) as data centers shift workloads to artificial intelligence (AI) and away from central processing units (CPUs). At last check, INTC stock was down 3.6% at $53.11, and options volume is accelerated.

With about an hour left in the session, around 95,000 calls and 63,000 puts have changed hands on Intel -- more than two times what's typically seen at this point, and volume pacing in the 91st annual percentile. Most active is the weekly 6/22 54-strike call, where buy-to-open activity has been detected. The volume-weighted average price on these calls is $0.33, making breakeven for the call buyers at this Friday's close $54.33 (strike plus premium paid).

This bullish bias just echoes the recent trend seen in INTC's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 3.33 ranks in the 73rd annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.

Regardless of if it's calls or puts, it's a prime time to buy premium on the tech stock. Intel's Schaeffer's Volatility Index (SVI) of 22% ranks in the 16th percentile of its annual range, indicating short-term options are pricing in low volatility expectations at the moment.

On the charts, Intel stock has been in a long-term uptrend -- boasting a year-over-year gain of 51%, and fresh off a 17-year peak of $57.60 on June 4. What's more, INTC stock's pullback is being contained by its 80-day moving average, which, along with its 120-day moving average, has helped usher the shares higher since last September.

intc stock daily chart june 18




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