A Dirt-Cheap Way to Play Intel (INTC) With Options – T3 Live
T3 Live

A Dirt-Cheap Way to Play Intel (INTC) With Options


Intel (INTC) is reporting second-quarter earnings after the close today, and implied volatility on weekly options is incredibly high.

This creates a good opportunity for a calendar spread, where you short expensive near-term options and go long cheaper long-term ones.

Here's a trade I'd look at:

-Sell $36 call (this Friday's expiration) for 36 cents
-Buy $36 call (August 19 expiration) for 50 cents

Debit of 14 cents per lot (give or take 2 cents).

This is an extremely cheap way to play a flat or up reaction in Intel shares, and it could profit even if the stock drops modestly after earnings.

The best case scenario is Intel closing at $35.99 on Friday. That would put the short call at $0, and the long call worth around 58 cents, assuming a drop in IV to 17%.

That would be a 314% profit.

The worst case scenario would be if Intel drops big, which would wipe out the entire 13 cent debit.

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