INTC Analysis

Intel Corp. (INTC)

Update 10/30/2017: INTC announced earnings of $1.01 per share, coming in well above the consensus estimate of $0.82. The stock price gapped up nearly $2 at the opening bell. I exited for a loss.

Although Zacks was bullish on INTC, it gave only a 0.06 score in favor of an upside earnings surprise. The post-announcement $3.69 move by the end of first trading day had exceeded the $2.24 maximum of the past year by $1.45, in line with a trend from last summer of the market giving outsized reactions that have cut into my profits.

Shares rose by 8.2% over my four-day holding period, or a 750% annual rate. The options position produced a -49.4% loss for a -4,142% annual rate

INTC publishes earnings on Thursday after the closing bell.

I shall use options that trade for the last time eight days hence, on Nov. 3.

Implied volatility stands at 26%, which is 2.4 times the VIX, a measure of the volatility of the S&P 500 index.

INTC’s IV stands in the 94th percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $41.32.

Premium: $1.60 Expire OTM
INTC-iron fly Strike Odds Delta
Calls 45.00 94.1% 7
Break-even 43.10
Short 41.50 54.88 47
Short 41.50 45.1% 53
Break-even 39.60
Long 38.00 89.2% 10

The premium is 45.7% of the width of the position’s wings.

The risk/reward ratio is 1.2:1.

The zone of profit in the proposed trade covers a $1.75 move either way. The biggest immediate move after each of the past four earnings announcements was $2.34, and the average was $1.07. After eliminating the maximum and minimum post-earnings movements, the central tendency is $0.85.

The expected move covering 85% of occurrences is $1.53, within the profit zone.

The bid/ask spread is 1.2%.

Decision for My Account

I have entered a position on INTC as described above. The stock at the time of entry was priced at $41.33.

By Tim Bovee, Portland, Oregon, October 26, 2017


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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