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May 2, 2012  Wed 10:16 AM CT

INTC: SEE CHART GET CHAIN FIND STRATEGIES
Intel is just off a four-year high it reached yesterday, but a huge put trade dominates option activity in the chip giant today.  

INTC is down fractionally at $28.87 this morning after hitting $29.05 at yesterday, its highest price since 2004. The stock is up 50 percent since its 52-week low set in August.

Two of the largest option prints of the day come in INTC puts. A trader bought 20,000 June 29 puts for $1.02 and sold 20,000 of the May 28 puts for $0.28, according to optionMONSTER's Depth Charge system. The volume at that May strike was less than open interest.

It appears that the trader is rolling the put position out from May to June as we close in on the last two weeks before expiration, when time decay is at its worst. The position may be an outright bearish position, as the trader moves into the in-the-money puts. (See our Education section)

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As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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