Intel's 11% Intraday Jump Attracts Millions of Dollars in Option Trades
$Intel(INTC)$
The stock jumped after the semiconductor company unveiled its latest processors designed to run AI on laptops. Intel Core Ultra Series 3 processors make up the first AI PC platform built on the company's 18A process technology that was designed and manufactured in the U.S.
Intel touted Series 3's potential to be the most broadly adopted and globally available AI PC platform that the company has ever delivered, during the CES conference late Monday.
"Given the performance, privacy, security, cost efficiency, and data control concerns around the cloud, there is a strong case for localized computing," JPMorgan analysts including Harlan Sur wrote in a note to clients yesterday. “Intel is leveraging its scale and ecosystem to develop and enable AI processing across PC compute and into a wide range of AI edge devices.”
Still, that wasn't enough to push the JPMorgan analysts to upgrade their rating on the stock from underweight. That's equivalent to a recommendation that investors should allocate a smaller portion of their portfolio on Intel shares than its current weighting in the benchmark index.
The uncertainty over $Intel (INTC.US)$'s prospects is strengthening the case for block trades in options that give their buyers the opportunity to benefit should the stock keep rising, while offering some relief in case the rally losses team.
An active seller collected a $6.8 million premium for unloading in-the-money call options that give their holder the right to buy Intel shares at $37 each in the next 9 days. That multi-leg transaction came with two other block trades, signaling that the seller may have used the proceeds to finance the purchase of out-of-the-money call options with a higher strike price, while locking in gains from the stock's recent rally.
At the exact time that trade was posted, an active buyer paid a premium of $5.83 million for out-of-the-money call options that give their holder the right to purchase 1 million Intel shares at $48 each by June 18. Another leg of the trade had an active seller collecting a $2.86 million premium for selling out-of-the-money call options covering the same number of Intel shares with a higher strike price of $60 each, also expiring in 161 days.
While the purchase of $48 call options just has a 24% profit probability at current prices, the other side of the trade– the sale of the $60 call options – has better odds, 87% profit probability.
Even as Intel is finally making its mark in the AI field, the question remains whether it can catch up its bigger peers. The company is likely to get small volume projects from customers as a result of the U.S. government investment in Intel, Bloomberg News quoted JPMorgan analysts including Gokul Hariharan as saying.
The American chipmaker will likely lose almost all the mission critical projects in the 2-nanometer space to $Taiwan Semiconductor Manufacturing(TSM)$
Intel would need to prove that it can execute on at least two or three leading-edge process nodes before it can win the confidence of its fabless customers, the JPMorgan analysts said.
@TigerStars @CaptainTiger @TigerWire @Daily_Discussion @Tiger_chat @Tiger_comments @MillionaireTiger
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
