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Intel Stock Options Bear Bets Nearly $4 Million

Chip stocks are taking a big hit in today's trading

Oct 10, 2018 at 3:16 PM
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Chip stocks are taking a big hit amid today's broad-market decline on news Swiss valve maker VAT Group cut hours for workers, citing softening demand from the semiconductor companies it supplies. One notable name selling off is Intel Corporation (NASDAQ:INTC) -- down 2.3% to trade at $45.46, on track for their fourth loss in five sessions.

Against this backdrop, INTC options volume is running at an accelerated pace, with roughly 140,000 calls and 70,000 puts on the tape -- two times what's typically seen at this point in the day. The December 44 put is one of Intel's more active options, due in part to a 22,000-contract block that was likely bought to open for $1.76 apiece.

If this is the case, the initial cash outlay on the bearish options trade is about $3.87 million (number of contracts * premium paid * 100 shares per contract). This is also the most the trader stands to lose, should INTC settle above $44 at the close on Friday, Dec. 21. Profit, meanwhile, will accumulate on a move below breakeven at $42.24 (strike less premium paid).

More broadly speaking, it's been call buyers who have been blasting Intel. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 4.31 ranks in the 96th annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.

A continued shift in sentiment among options traders could certainly create bigger headwinds for underperforming INTC. Since topping out at a 17-year high of $57.60 in early June, the Dow stock has shed 21%. Plus, today's drop has the shares set to close south of their 320-day moving average, a short-term layer of support that could now be switching to resistance.

intc stock daily chart oct 10


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