The shares of Intel Corporation (NASDAQ:INTC - 20.21) are struggling in the face of broad-market headwinds, and are at risk of ending the week beneath their 10-week and 20-week trendlines for the first time this year. Nevertheless, options traders are gambling on a quick recovery for the blue-chip tech stock, as evidenced by today's appetite for weekly calls.
In afternoon trading, INTC has seen about 55,000 calls change hands -- a 74% mark-up to its average intraday volume. For comparison, roughly 41,000 INTC puts have traded thus far.
Most popular is the weekly 3/1 20.50-strike call, which has seen close to 8,700 contracts cross the tape at a volume-weighted average price (VWAP) of $0.18. With not a single contract open at the strike, and considering most of the calls traded on the ask side, it's safe to assume that bulls are buying the calls to open.
By doing so, the traders expect INTC to muscle back atop the $20.68 level (strike plus VWAP) by the closing bell next Friday, March 1, when the weekly options expire. At last check, delta on the call stood at 0.35, or 35%, implying a roughly 1-in-3 chance of finishing in the money. However, even if INTC extends today's downturn, the most the buyers have risked is the initial premium paid for the calls.
From a broader sentiment perspective, bullish bets have become par for the course for INTC. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), investors have bought to open more than two calls for every put during the past couple of weeks. What's more, the equity's 10-day call/put volume ratio of 2.49 stands higher than 80% of all other readings of the past year, indicating that option buyers are picking up INTC calls at a faster-than-usual pace.
As a result, the stock sports a Schaeffer's put/call open interest ratio (SOIR) of 0.73, implying that calls outnumber puts among options with a shelf-life of three months or less. Furthermore, this ratio registers in the 12th percentile of its annual range, suggesting near-term options players are more call-skewed than usual at the moment.
At last check, INTC has given up 2.5% to explore the $20.21 level, and -- as alluded to earlier -- is in danger of ending south of its 10-week and 20-week moving averages for the first time in 2013. This duo of trendlines ushered INTC significantly lower in 2012, and could reemerge as resistance. However, the security could find a foothold in the $19-$20 neighborhood, which has contained the bulk of INTC's pullbacks since late 2009.
I could not even see the 3/1 weeky options. I had to go to CBOE and look at their extended view. The orders were sprinkled around the exchanges with 5k of them on the AMEX exhange.
When the execute comes at the ASK, it could be from someone buying at the ASK price. Option prices move slowly so it could also be someone submitting a LIMIT SELL like I would for covered calls. If the price of the stock goes up, the OMM might just harvest my calls as their pricing become atractive to him.
It is VERY HARD to determine if a transaction is BULLish or not without some background information. I tend to use the BID SIZE and ASK SIZE to see if their is a big imbalance. The large size tells me if they are selling or buying.
Good to see that Schaeffer thinks it is bullish. They make no reference to the buyback.