INTC shares could benefit from duel-layered technical support
Shares of Intel Corporation (NASDAQ:INTC) have been under pressure in recent days, after researchers found security flaws in many of the company's microprocessors. INTC stock fell 3.4% yesterday on the news -- while AMD stock rallied -- and is down another 2.4% today to trade at $44.17, even though the company said it is "rapidly issuing updates" that will be "mitigated over time." But while put options are popular today, there's reason to believe the worst could be over for Intel.
Specifically, the equity was actually flirting with session highs at last check, earlier taking a sharp bounce from the $43 area. This is the site of the stock's October bull gap, and it neatly contained its pullback in December. Moreover, the rising 80-day moving average -- one of our favorite trendlines -- sits just below this price point.
As for options activity, Trade-Alert notes that one trader made a quick profit of roughly $222,000 by opening 15,888 February 43 puts yesterday and closing them earlier today. More than 163,000 puts have traded in total today, four times the daily average, and open interest now on Intel ranks in the 99th percentile.
Speaking of pessimists, we'll have to see if the recent price action moves the short interest needle at all. The number of INTC shares held by short sellers has been steadily increasing over the past six months, and the 152.5 million shares dedicated to short interest at the moment is almost six times the security's average daily trading volumes.
It's important to point out that Intel stock had been performing well before the recent setback, even as short interest surged higher. During the past six months alone, the shares added over 31% and they touched a 17-year high of $47.64 in December. So if INTC can right the ship, those shorted shares could turn into a fresh source of buying power.