Semiconductor manufacturer Intel (INTC) has been rallying this year, after investors wrote off the company last year for hotter plays in the chip market. One trader is betting that shares will continue higher through next spring.
That’s based on the March 2024 $41 calls. With 220 days until expiration, 7,143 contracts traded compared to a prior open interest of 229, for a 31-fold rise in volume on the trade. The buyer of the calls paid $2.11 to make the bullish bet.
Shares recently traded for about $35. So they would need to rally another $6, or about 17 percent, in the coming months for the option to move in-the-money. They would also need to break over the stock’s current 52-week high of $37.19 per share.
Following its rally so far this year, Intel is now priced about where shares were last year before the worst of the 2022 bear market. Revenues remain down a bit, and the company has lost its leadership with others pushing for development of AI chips.
Action to take: While being a laggard, shares still have more upside ahead, especially if they can get back to profitability.
The chip market is diverse and many industries require chips, including those being overlooked as AI chips get all the interest right now. Investors can also get a 1.4 percent dividend while they wait.
For traders, the March 2024 calls are inexpensive for how much time they have to play out. A further rally could see the option deliver high double-digit gains in the months ahead.
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.