Intel Corporation (INTC) is a designer and manufacturer of digital technology platforms consisting of microprocessors and chipsets. The company’s stock is currently trading around $23.50 in a 52 week range of $19.23-$25.98. The stock has rallied nearly 14% year to date but is only higher by 7.8% over the past 12 months. INTC is scheduled to report their most recent quarterly earnings today after the bell. The stock has been relatively weak on earnings day over the past 8 quarters. The stock sold off on earnings day 5 of the past 8 quarters with an average move of 2.7%. The options market is currently implying a move of just over 4% by this Friday’s expiration. This is a large implied move relative to the historical average and can present an opportunity. Knowing the stock only moves 2.7% gives a trader the chance to sell the implied move in INTC. We can approach this in several different ways, but the trade outlined below offers the most efficient and risk controlled way to fade movement in INTC. This trade has a trader short premium and implied volatility but does not have the risk of blowing out an account.
Trade: Selling the INTC Oct 23.5 Straddle to Buy the Oct 22-25 Strangle for $0.80 Credit
Risk: $70 per 1 lot
Reward: $80 per 1 lot
Breakeven: $22.70 and $24.30
