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Intel Bulls Eye Fresh Highs In Chip Maker’s Shares Come Springtime

Posted on the 30 November 2011 by Phil's Stock World @philstockworld

INTC - Intel Corp. – A spate of buying activity in Intel Corp. call options this morning suggests some options strategists are positioning for substantial bullish movement in the price of the underlying over the next four to five months. Shares in Intel are certainly heading higher today, with the stock currently up 5.5% to stand at $24.86 as of 12:10 PM in New York. Fresh prints in March 2012 contract calls indicate investors may profit if Intel’s shares rally to their highest level in at least five years. Traders taking a bullish stance on the chip maker picked up more than 4,200 calls at the Mar. 2012 $28 strike for an average premium of $0.43 each. Like-minded optimists paid an average premium of $0.28 per contract to purchase roughly 9,100 calls at the higher Mar. 2012 $29 strike, as well. Investors long the call options may profit at March expiration in the event that Intel’s shares surge 14.4% and 17.8% to surpass the average breakeven prices of $28.43 and $29.28, respectively. Looking out to options expiring in April 2012, it appears some 8,800 calls changed hands at the $29 strike against open interest of 2,037 contracts. Investors purchased most of these contracts for an average premium of $0.45 a-pop. Finally, short-term bulls are dabbling in Intel Corp. weekly calls. It looks like investors that got in ahead of the week’s rally are taking profits off the table today. Open interest patterns in the Dec. ’02 $24 strike suggest traders purchased around 3,500 of the calls for an average premium of $0.10 each one day prior to Thanksgiving. This morning these calls were sold roughly 3,500 times for an average premium of $0.64 each, or approximate one-week gains of 540%.

S - Sprint Nextel Corp. – Shares in the wireless carrier joined in on the broad market rally today, rising 3.6% to $2.59 in early-afternoon trade. However, a large transaction in weekly puts on the stock indicates one strategist is prepared should the music stop. It looks like the investor purchased around 27,000 puts at the Dec. ’02 $2.5 strike for a premium of $0.07 apiece. The trader may profit at expiration this week if shares in Sprint Nextel Corp. drop 6.2% from the current price of $2.59 to breach the effective breakeven point at $2.43. Immediate-term bearish options activity in the weekly puts contrasts with a much rosier view of the stock going forward a couple of months. Over the past couple of days the Jan. 2012 $2.5/$4.0 call spread has been popular with at least one options player, who appears to have paid as little as $0.25 and as much as $0.34 per contract to build up a 40,000-lot bullish position on the wireless provider. The $2.5/$4.0 debit call spread yields maximum gains of $1.16 to $1.25 per contract in the event that Sprint’s shares soar more than 50.0% to exceed $4.00 by expiration day in January.

ACN - Accenture PLC – The provider of management consulting and technology services popped up on our scanners at the start of the trading session after one investor traded a large block of put options in the January 2012 contract. Put buying on Accenture this morning may be a sign the trader is bracing for a pullback in the price of the underlying over the next couple of months. Shares in ACN today rose as much as 4.2% to an intraday high of $57.91. Options activity on the stock is concentrated most heavily at the Jan. 2012 $57.5 strike where more than 6,000 puts changed hands against open interest of just 1,286 contracts. It looks like the investor responsible for the burst of put activity purchased the contracts for an average premium of $3.04 apiece. Profits may be available on the position should Accenture’s shares drop 6.0% to breach the average breakeven price on the downside at $54.46 at expiration next year. Accenture PLC is scheduled to report first-quarter earnings after the final bell on December 15.

Caitlin Duffy
Equity Options Analyst

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Intel Bulls Eye Fresh Highs In Chip Maker’s Shares Come Springtime
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