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Last week’s rally has been based on some positive trade news regarding a potential deal between the United States and Mexico, and I think Canada will want to strike a deal with the United States as well. China, however, is not playing along, and getting that country to agree to a deal is not going to be easy. I think it would be much better for the whole world if the two countries were able to come to an agreement on trade, but that doesn’t seem to be in the cards right now.

Several industries have been hit particularly hard by the trade war between China and the United States, but once that situation is resolved, I’m looking for a bounceback. The tariffs’ effect on the semiconductor industry presents an interesting opportunity with a good risk-reward picture. So today I’m recommending a bullish trade on Intel Corporation (NASDAQ:INTC).

Using a spread order, buy to open the INTC Oct. 19th $50 call and sell to open the INTC Sept. 28th $51 call for a net debit of about $0.60.

Note: There are several expirations available for INTC options. Be sure you are opening the options that expire on Friday, Oct. 19, 2018 and Friday, Sept. 28, 2018, respectively.

A debit spread is simply a way to lower the cost of buying options, as the option that you sell to open (short) helps offset the cost of the option that you buy to open. Therefore, this call debit spread is a way to lower the cost of buying bullish call options. Many brokers will require the use of margin and/or a set amount of reserved capital to execute a debit spread; contact your broker directly for specific requirements.

We want INTC to stay below $50 before Sept. 28th, and after that it can go up as much as it wants, which would allow us to turn a profit on our long option for October. I’m planning to hold about a month, hoping it rebounds after September.

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Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.