We have not had a Top Trade on INTC since December and it's $5 cheaper now so a good time for a new one.
As I said in last week's Webinar, I expected INTC is already building foundries to help ease their supply chain issues and Samsung is now talking with them about it, which is a very good sign.
Everything I liked about INTC at $50 I like 10% more at $45 ($44.12, actually) as that's $182Bn and their "slump" last year earned $19.8Bn but this year and next more like $14.5Bn as they are spending $5Bn a year building foundries to ensure they never run out of components. Unlike most traders, I don't mind when companies invest in themselves.
INTC, by the way, has no net debt and pays a $1.46 (3.28%) dividend if you are into that sort of thing. In the LTP, we just rolled the 2024 $40 calls down to the 2024 $30 calls and now we have this:
| INTC Short Call | 2024 19-JAN 60.00 CALL [INTC @ $44.18 $-0.38] | -40 | 1/27/2022 | (598) | $-19,000 | $4.75 | $-2.39 | $0.10 | $2.36 | $-0.04 | $9,560 | 50.3% | $-9,440 | ||
| INTC Short Put | 2024 19-JAN 45.00 PUT [INTC @ $44.18 $-0.38] | -20 | 11/1/2021 | (598) | $-13,000 | $6.50 | $1.05 | $7.55 | $0.25 | $-2,100 | -16.2% | $-15,100 | |||
| INTC Long Call | 2024 19-JAN 30.00 CALL [INTC @ $44.18 $-0.38] | 40 | 5/20/2022 | (598) | $54,400 | $13.60 | $2.28 | $15.88 | $-0.18 | $9,100 | 16.7% | $63,500 |
That's not bad as a new trade but, as a new, new trade – I'd go for this:
- Sell 10 INTC 2024 $45 puts for $7.50 ($7,500)
- Buy 20 2024 $40 calls for $9.25 ($18,500)
- Sell 20 2024 $50 calls for $5 ($10,000)
That's net $1,000 on the $20,000 spread that's $8,400 in the money to start and the upside potential is $19,000 (1,900%) if INTC can scratch it's way back to $50 in the next 18 months. You see, there's no need to bet on crazy stocks or take crazy risks to make huge returns. The worst case in this spread is owning 1,000 shares of INTC for net $46,000 or $46/share – just a little bit more than buying the stock today and, of course, we can roll the short calls to lower strikes in 2025.
