Intel options traders cautious, eyeing earnings

* Intel options pricing in about 4.7 pct swing on earns

* Buyers target July $20, August $21 put options

* Whisper number slightly outpaces Wall Street estimates

By Doris Frankel

CHICAGO, July 13 (BestGrowthStock) – Many option traders appear to
be taking a neutral to cautious stance on Intel Corp (INTC.O: )
heading into the technology bellwether’s second-quarter results
after the closing bell on Tuesday.

Although calls are outpacing puts into the chip maker’s
earnings, a number of traders have picked up protective put
options, possibly betting that optimism heading into earnings
is likely to fade in the aftermath of the report.

“The option market is indicating a neutral to bearish bias
in Intel with put buying very active right after the opening
bell and continuing this afternoon,” said Joshua Belanger, a
founder of Web information site OptionSIZZLE.com.

Shares in Intel have slid 8 percent since the start of
April. The chip sector has been battered by fears that economic
woes in Europe will hit end-demand for PCs and concerns that
semiconductor margins might have peaked amid fast-growing
inventories worldwide.

But analysts now expect a rebound in technology hardware
upgrades or replacements by corporations — after a two-year
spending drought — to underpin second-half sales of
higher-margin server and notebook processors.

During the last hour of trade, options volume was 3.7 times
greater than normal with about 121,000 puts and 194,000 calls
traded, data from options analytics firm Trade Alert show.

Belanger noted the biggest orders have been bought in the
July $20 and August $21 puts. On the other side of the board,
the top orders have been in the August $19 and July $20 calls
which traded on the bid, a strong indication that these options
have been sold.

“It appears that traders are either protecting their stock
positions in Intel after the current run-up in the broad market
or positioning themselves for a cautious outlook from the
company,” Belanger said.

Investors often turn to put options, which grant them the
right to sell shares at a fixed price any time until
expiration, to protect a stock position or speculate on
potential stock weakness.

An equity call option conveys the right to buy the shares
at a preset price up to a certain date.

Option traders are pricing in about a 4.7 percent move up
or down in the stock after Intel’s report, according to Jud
Pyle, chief investment strategist at Options News Network, a
division of option market making firm PEAK6 Investments in
Chicago.

Pyle said the unofficial “whisper” number, or current
expectations of investors and analysts, is 45 cents, slightly
higher than the average expectations on Thomson Reuters
I/B/E/S.

According to that data, Wall Street expects Intel to report
second-quarter revenue of roughly $10.25 billion, with a gross
margin of 64.04 percent, and earnings of 43 cents per share,
excluding items.

“The sentiment is neutral with some people taking
speculative bets on the inexpensive July $22 calls while many
who are currently long stock are selling many of the July $21
calls as a hedge or to collect premium,” said TD Ameritrade
chief derivatives strategist Joe Kinahan.

July options expire on Friday after the close.

“The expectation is that the earnings move will not be
drastic and some would even classify it as muted,” Kinahan
said.

The stock was up 42 cents at $20.99 late Tuesday afternoon
on Nasdaq.
(Reporting by Doris Frankel, Editing by Chizu Nomiyama)

Intel options traders cautious, eyeing earnings