Shares of chipmaker
Intel (INTC) have been a poor performer in the past year, but the company has had some surges higher. One trader sees another such move playing out in the weeks ahead.
That’s based on the May 28th $50 calls. With 37 days until expiration, 16,101 contracts traded against an open interest of 261, for a 71-fold surge in volume on the contract. The buyer of the calls paid $0.17 to get into the trade.
Overall, Intel shares have slid 28 percent over the past year, and are well off their 52-week high of just under $65 per share.
While growth has slowed relative to other chipmaking plays, the company trades at 13 times forward earnings, and under 10 times current earnings. That makes it one of the least expensive names in the space. And it’s still working on expanding into new applications for its chips.
Action to take: Investors may like shares here, as the stock yields 3.1 percent at current prices with room for future growth. That’s in addition to a fat profit margin and strong balance sheet, which not every tech company can boast right now.
For traders, shares look poised to move higher, but are being held back by overall market conditions. That makes the May calls look attractive on a short-term basis. Traders looking for more time for a bigger swing higher shares could also consider the September $47.50 calls.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.