With the U.S. presidential election dogging Wall Street’s heels, many stocks, especially tech stocks, are looking to bounce back after nine straight sessions of selling. Semiconductor giant Intel Corporation (NASDAQ:INTC) has had it particularly rough, with INTC stock plunging more than 12% since mid-October. But will the election results bring relief or misery for INTC stock?
Click to Enlarge First, let’s look at the technical picture. There has been little to cheer about with INTC’s stock price recently. In fact, the shares are trading at their lowest point since July, breaching key support at $34 on Friday.
However, the shares are bouncing back this morning, and are on course to reclaim this technical level — an important development for Intel stock bulls that could be a precursor to a rally back toward $36.
That said, even if INTC falls post-election, support is rising into the area in the form of Intel’s 200-day moving average. This trendline is currently perched in the $32.50 region. July marks INTC stock’s last close below this moving average.
Checking in on Intel stock’s sentiment backdrop, we find that the brokerage community is warming up to INTC. According to Thomson/First Call, 26 of the 41 analysts following Intel rate the shares a “buy” or better in November, up from 23 “buy” ratings last month. Furthermore, the 12-month consensus price target of $40.19 represents a 19.6% premium to Friday’s close.
The situation is already improving rapidly on the options front. For instance, INTC stock’s November put/call open interest ratio has fallen to a reading of 0.43 after rising heading into last month’s earnings report. Calls also more than double puts among options set to expire at the end of this week, with the weekly Nov. 11 put/call open interest ratio arriving at 0.47.
Overall, weekly Nov. 11 series implieds are pricing in a potential move of about 3.75% by the end of the week, placing the upper bound at $34.86 and the lower bound at $32.34. The upper bound is just shy of resistance in the $35-$36 region, though follow-through buying should help push INTC stock nearer to $36 by the time monthly November options expire.
On the downside, support in the $32.50 region, and Intel’s 200-day moving average, should stall any post-election jitters.
2 Trades for INTC Stock
Call Spread: Traders looking to bet on a continued rebound for INTC stock, including a post-election relief rally, might want to consider a Nov $34.50/$35 bull call spread. At last check, this spread was offered at 8 cents, or $8 per pair of contracts. Breakeven lies at $34.58, while a maximum profit of 42 cents (or $42 per pair of contracts) is possible if INTC stock closes at or above $35 when November options expire.
Put Sell: There’s plenty of volatility, however, in the overall market — especially with tomorrow’s presidential election. The recent selloff appears to have priced in the potential for a Trump win, meaning that immediate downside risk is negligible. Traders not willing to take the risk of an outright bullish play might want to consider a weekly Nov. 11 series $33 put sell position. At last check, this put was bid at 26 cents, or $26 per contract.
As always, the upside to this put sell strategy is that you keep the premium as long as INTC stock closes above $33 when weekly November options expire this Friday. The downside is that if INTC trades below $33 ahead of expiration, you could be assigned 100 shares for each sold put at a cost of $33 per share.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
