Options Trading News

April 10, 2013  Wed 4:45 AM CT

Intel jumped yesterday but is facing what appears to be a large bearish position.

optionMONSTER systems show that a trader bought 14,000 July 18 puts for the ask price of $0.16 against open interest of 20,509. At the same time, he or she sold 42,000 July 16 puts for the bid price of $0.04 in volume far above open interest of under 2,000, so that was a new position.

The trader could be rolling a short puts to a lower strike while greatly increasing the size of the position, but it is far more likely that this is a bearish ratio spread. The latter would take a maximum profit if INTC is down around $16 by expiration in mid-July. (See our Education section for more on vertical spreads.)

INTC rose 3.13 percent to $21.75 yesterday. The chip giant's shares were down at a 52-week low near $19 in November but are back near resistance around $22 that has been in place since early October.

More than 353,000 INTC options traded in the session, compared to a daily average of 63,000 in the last month. 
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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