The sky may not be the limit at Intel Corporation (NASDAQ:INTC), but bullish investors still have plenty of room to run in INTC stock as shares look terrific both off and on the price chart. Let me explain.
Much like a recent eye-opening ad campaign aimed to inform and impress consumers with all the new markets Intel is working in beyond its PC business, INTC stock allowed investors to “experience amazing” this past Friday with its earnings bonanza.
Shares of Intel blasted higher by 10.55% following the company’s solid profit beat, upwardly revised full-year guidance and 10% dividend hike.
Bottom line, increasingly important initiatives like its data center business, strategic investments into memory, autonomous driving, communications and programmable solutions, as well as help from the Trump administration’s new tax plan are rebooting shares.
In the process, recent warnings of Spectre and Meltdown bugs impacting earnings, as well as a highly scrutinized sale of $24 million in INTC stock by CEO Brian Krzanich this past quarter, appear to be officially laid to rest.
At the same time and also good news for investors, INTC stock’s good fortunes look to be rising and far from over, on the price chart as well.
INTC Stock Weekly Price Chart
Back in October INTC stock successfully broke out after nearly three years of consolidation work and being frustratingly unresponsive to the broader market’s massive and continued bullish run to fresh all-time-highs over the same period.
Technically, Friday’s breakout of a smaller, slightly-irregular basing pattern acts as nice confirmation INTC has changed its character for the better and that its rally and newfound support are not misplaced.
Looking forward, Intel stock is still a full 50% below its “dot.bomb” all-time-high and, considering Intel’s reinvigorated growth prospects, INTC stock investors are positioned to outperform in 2018 and beyond.
INTC Stock Collar Strategy
With INTC stock’s growth narrative looking good off and on the price chart and additional income for stockholders, a collar strategy to ride an anticipated rally while guarding against unforeseen downside risk, makes sense.
One favored combination is the April $55 call/$47 put collar. The slightly non-symmetrical construction is priced for $50.44 versus buying INTC stock for $50.08.
If INTC rallies a collar trader is initially capping profits into April expiration due to the positioning of the sold $55 call. But that gain is a healthy 9%. As well, an adjustment during the life of the position could always allow the investor to remain long Intel shares and continue to capture increased returns.
On the downside and for an additional .70% of premium over shares, the collar guarantees that if INTC drops below $47, the trader’s loss is contained to less than 7% no matter how low shares might go without having to rely on less-secure money management techniques.
Furthermore, if buying on weakness, rather than bailing and exiting during more technically troubling periods is a strategy of choice; the collar is definitely a nice insurance policy to consider owning.
Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. . For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
