INTC IV Looking Big

Sign up for our Volatility Event on Oct 4th  here.

Another toxic brew for stocks today as equates drifted down around 1+% for the day.  None of this was really attributable to the numbers.  ADP was ok but the Ebola, HK, Russia, ISIS concoction of market sadness kept sentiment weak.  Note how all the problems are more political than anything else.  They need the will to solve them.  This did drive IV up to some higher levels so those with some dry powder listen up.

INTC reports in 13 days and the 30-60 day IV differential is already at 2 year high levels.  By and large INTC has been steadily climbing this year on the back of surprisingly good earnings when most of the street had relegated the name to the dustbin of left behinds.  I like INTC but not as much as when it was $25.


LivevolX (r)

So use the volatility differential and try to jump in at lower prices.  I think the diagonal put spreads make a nice trade here with the run up near term vol.  The jump up last time scared traders out of their socks and there might be another one.

On a side note, I got a graphic from a client that said 50% of all gains in stocks over the last 25 years occurred in the final quarter.  If true, today is a nice buying opportunity.  The INTC trade might fit.

The Trade

I like selling the INTC Oct cycle puts and buying the Nov cycle puts in a diagonal.  Make sure the Oct put is closer to the money than the Nov put.  The idea is not take stock at a 10% discount if INTC falls or get the Nov 30 put for even money if INTC rallies a bit.  This should put you in around $31 plus if so inclined.

Disclosure- INTC positions

Follow Mark on twitter @optionpit

Follow Andrew on twitter @optionvol



Blog Image: