Markets

Large trade targets steep drop in Intel

Intel has struggled in recent weeks, and one investor thinks that the bottom may fall out.

optionMONSTER's Depth Charge monitoring system detected the purchase of about 40,000 October 24 puts for $1.03 and the sale of an equal number of October 19 puts for $0.13. Volume was more than triple open interest at both strikes.

The trade cost $0.90 to open and will earn a maximum profit of 456 percent if the semiconductor giant closes at or below $19 on expiration. It's known as a bearish put spread because it leverages a move between two specific price levels. (See our Education section)

INTC dropped 2.56 percent to $24.74 yesterday, its lowest close since the beginning of the year. The stock has been making lower highs and lower lows since the beginning of May as investors grow increasingly nervous about global growth. Technology companies such as INTC tend to be highly sensitive to the health of the broader economy.

The chip maker's next earnings release is scheduled for July 17 after the bell. The last report in April beat expectations amid strong PC demand, but large computer makers such as Hewlett-Packard and Dell have struggled since then.

Overall option volume in INTC was quadruple the daily average in yesterday's session, according to the Depth Charge.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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