Chip Maker Intel Stock Has Earnings Around The Corner; This Option Play Bets On A Big Move | IBD

TL;DR

Investors can use the straddle option strategy on Intel stock for potential earnings profits by buying a 30 call and 30 put with the January 27th expiration.

Transcript

foreign Traders for today's trade we're looking at an option strategy known as the straddle in Intel stock this is a great strategy to use if you take no view of the up or down direction of a stock but instead believe that shares will move either way more than the market is anticipating so looking at Intel on Market Smith we can see that shares jus... Read More

Key Insights

• 🧑‍💻 Intel's stock has been in a downtrend along with other tech stocks.
• 🛩️ The options market implies a smaller move on Intel's earnings compared to historical average.
• 😚 Placing the straddle trade closer to Intel's earnings report may result in a smaller debit and closer break-even point.
• ❓ Recent earnings events for Intel have been increasingly volatile.
• 😚 Straddle options come with risks, and investors can lose their entire investment.
• 🥳 Regular options content on Investors Business Daily provides new trade ideas every day.
• 🎮 It is advisable to subscribe to Investors Business Daily on YouTube for more informative videos.

Questions & Answers

Q: What is a straddle option strategy?

A straddle involves buying both a call and a put option with the same strike price and expiration date. It allows investors to profit from significant price movements in either direction, regardless of their view on the stock's movement.

Q: Why is Intel stock relevant for the straddle strategy?

Intel stock has been in a downtrend, similar to other tech stocks. With earnings approaching, the options market implies a move of 7% on Intel's earnings, providing potential profit opportunities for straddle traders.

Q: When is Intel's earnings report?

Intel's fourth quarter earnings report is scheduled for January 26th.

Q: What is the maximum loss and maximum gain for the straddle trade?

The maximum loss is $260 if Intel shares trade exactly at $30 on expiration. The maximum gain is unlimited if there is an earnings blowout and the implied move remains subdued.

Summary & Key Takeaways

• Intel shares recently regained the 50-day moving average and 21-day lines after a downtrend in the tech market.

• The options market implies a 7% move on Intel's earnings, which is lower than its historical average.

• Investors can place a straddle trade by buying a 30 call and 30 put with the January 27th expiration, potentially earning a profit if Intel trades below $27.40 or above $32.60 on expiration.