Intel Corporation (INTC) has outperformed the SPX by 10 percentage points in the past three months
A few weeks back, we highlighted what seemed to be an
opportune time to target Intel Corporation (NASDAQ:INTC) options. This was mostly based off the stock's low
Schaeffer's Volatility Index (SVI), an indicator that's only gone lower in the time that's passed. Also during that time span, INTC shares have added 3.8% to trade at $35.91 -- putting them just above their year-to-date breakeven point -- and earlier hit an annual high of $36.04. Despite this strong technical performance -- and a fresh "buy" recommendation from Roth Capital this morning -- options traders are taking a bearish approach today in the options pits.
But first, taking a step back to look at INTC's SVI, the current mark of 16% sits just 3 percentage points from a 12-month low. This tells us that the options market is (still) pricing in historically low volatility expectations, which is what
premium buyers want to hear.
Traders are seemingly using this opportunity to buy INTC puts, which today are trading at 1.6 times the intraday average. The option that's seen the most volume is the September 34 put, and
buy-to-open activity appears likely. If this is the case, the buyers' goal is for INTC to fall below $34 by the close on Friday, Sept. 16, when the front-month series expires.
Generally speaking, call buying has dominated INTC's options pits lately. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 2.32 -- in the 91st percentile of its annual range. Considering this, and the stock's strong showing on the charts of late, there's a chance today's put players are actually
shareholders protecting paper profits.
Intel Corporation's (NASDAQ:INTC) recent surge higher may partly be explained by a large exodus of short sellers. Specifically, short interest declined by 11.7% during the two most recent reporting periods -- part of a much longer short-covering trend that started way back in late 2014. However, INTC's
short-interest ratio still comes in at a healthy 3.60, indicating the blue-chip stock has not sucked up all the available sideline cash just yet.
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