Intel: Value Trap or Buy The Dip?

Trade Thesis for Intel Corp. (INTC):

  • The stock is down ~21% from its recent peak.
  • This added volatility creates a nice opportunity for cash-secured puts.
  • The best way to learn and master the Triple Income Wheel strategy is by repetition.
  • Strike Zone is $47.00 - $51.00

While most semiconductor stocks have been enjoying a nice rally this year (for good reason)...Intel was apparently not invited to the party (or maybe its just late?).

To be fair, Intel has had its fair share of challenges this year...despite general tailwinds in the industry (i.e., chip demand far outpacing supply).

That said, we believe the stock could be bottoming out and is a coiled spring ready to pop as the company works through it manufacturing issues...with 25%+ upside potential over the next 3-6 months.

We were assigned the stock last week with a cost basis of ~$51.50...but we think that now is a good time to add to our position and ride the upside (or enter a new position if you are not in it yet)!

Writing some additional cash-secured puts right now has a better potential risk/reward profile than selling covered calls on INTC.



Trade Analysis (Click the video below)

Cash-Secured Put Analysis

Risk/Reward Analysis

Based on your personal risk tolerance, consider the following cash-secured put options with various risk/reward profiles

Aggressive Portfolio

(target monthly yield = 1.5%-3.0%)

INTC Sept 17th $52.50 Put

Price (Premium):  ~$0.63

Delta:  32

AMY%:  1.6%

MoS %:  2.4%

Base Portfolio

(target monthly yield = 1.0%-1.5%)

INTC Sept 17th $52.00 Put

Price (Premium):  ~$0.50

Delta:  26

AMY%:  1.3%

MoS %:  3.4%

Conservative Portfolio

(target monthly yield = 0.5%-1.0%)

INTC Sept 17th $50.00 Put

Price (Premium):  ~$0.21

Delta:  12

AMY%:  0.6%

MoS %:  7.1%

AMY % = Average Monthly Yield % / MoS % = Margin-of-Safety %

DISCLAIMER: Parsimony Investment Research and/or it's affiliates may or may not have a position in the stocks and/or options mentioned in this post at the time of publication. The information contained within this post is for informational and educational purposes only and it is not intended as a recommendation of the securities highlighted or any particular investment strategy; nor should it be considered a solicitation to buy or sell any security. The strategies and securities mentioned in this post may not be suitable for all types of investors and the information contained in this report does not constitute advice. Past performance is not a guarantee of future results. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker.

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