Option Trade 
Intel Corporation (NASDAQ:INTC) Calls 
Tuesday, January 12, 2016

**OPTION TRADE: Buy the INTC Apr 2016 35.000 call (INTC160415C00035000) at approximately $0.60. Place a pre-determined sell at $1.20.

Note: No protective stop losses added -- but if you wish to do so make it $0.25.

by Ian Harvey

January 12, 2016

Intel Corporation (NASDAQ: INTC), a designer and manufacturer of digital technology platforms, will release its fourth-quarter results after the market close on January 14, with analysts forecasting earnings of $0.63 per share. During the same period last year, the company earned $0.74 per share. INTC shares have appreciated 9.8% since the beginning of the fourth-quarter.

Intel has been trending higher over the last three months. The company has outpaced analyst estimates each of the last two quarters, in both cases posting better than expected numbers on both the top and bottom lines.

The company has faced its fair share of misery since the start of fiscal year 2015 (FY15), as more and more users migrated from PCs to smartphones. However, in a bid to explore new revenue streams, the company made a return to the commoditized memory business, alongside Micron Technology, Inc. (NASDAQ:MU) to develop next-generation 3D XPoint technology.

Furthermore, Intel managed to expand its product portfolio with the Altera acquisition. The Street’s analysts remain positive on this deal, and cited expansion in the company’s total addressable market (TAM) for data center and Internet of Things (IoT).

Intel Co. has a 1-year low of $24.87 and a 1-year high of $37.49. The stock has a 50 day moving average price of $34.44 and a 200 day moving average price of $31.41. The firm has a market cap of $148.70 billion and a P/E ratio of 13.55.

Management guided for revenue in the $14.3 billion to $15.3 billion range. The midpoint, which stands at $14.8 billion, implies a small increase from the $14.721 billion in sales reported a year ago.

The Street and the crowd also envision a slight surge in revenue. However, they are expecting a year-over-year decline in earnings of at least 13.5 percent.

In the same quarter last year, the tech behemoth delivered earnings of $0.74 per share on revenue of $14.721 billion. For the current quarter, management guided for revenue in the $14.3 billion to $15.3 billion range, but did not provide an earnings outlook.

The stock traded 9 percent lower in the last month and it currently trades at 13 times forward estimates, which is at the low end of its historical range. It is believed that the PC segment is stabilizing and it is 60 percent of the company's business.

Intel has a lot of growth potential in its data center, which can have a double-digit growth with the acquisition of Altera. It is also going to create some partnerships in the cloud segment to boost growth.

The semiconductor stocks are under a lot of pressure at the moment because of its global exposure. However, it seems that there is no reason for concern about Intel, because the market has set very low expectations and the company just has to meet its inline guidance.

Chicago Trust Company boosted its stake in Intel Co. by 1.1% during the fourth quarter, according to its most recent 13F filing with the Securities and Exchange Commission (SEC). The firm owned 122,032 shares of the chip maker’s stock after buying an additional 1,321 shares during the period. Intel accounts for about 1.6% of Chicago Trust Company’s portfolio, making the stock its 17th largest position. Chicago Trust Company’s holdings in Intel were worth $4,204,000 as of its most recent SEC filing.

A number of other hedge funds and other institutional investors also recently made changes to their positions in INTC. Lowe FS bought a new position in shares of Intel during the third quarter worth $12,000. Taylor Wealth Management Partners raised its position in shares of Intel by 16.0% in the fourth quarter. Taylor Wealth Management Partners now owns 1,160 shares of the chip maker’s stock worth $40,000 after buying an additional 160 shares during the last quarter. Assetmark raised its position in shares of Intel by 666.7% in the third quarter. Assetmark now owns 3,174 shares of the chip maker’s stock worth $96,000 after buying an additional 2,760 shares during the last quarter. Merriman Wealth Management bought a new position in shares of Intel during the fourth quarter worth $201,000. Finally, Toth Financial bought a new position in shares of Intel during the fourth quarter worth $219,000.

Intel Co.‘s stock had its “outperform” rating reaffirmed by Wells Fargo in a research report issued to clients and investors last Tuesday.

A number of other brokerages have weighed in on INTC. Needham & Company LLC lifted their price target on shares of Intel from $37.00 to $38.00 and gave the company a “buy” rating in a research note on Wednesday, December 30th. Citigroup Inc. reaffirmed a “hold” rating on shares of Intel in a research note on Wednesday, December 16th. Deutsche Bank reaffirmed a “buy” rating and issued a $38.00 price target (up previously from $37.00) on shares of Intel in a research note on Monday, December 28th. Tigress Financial lowered shares of Intel from a “buy” rating to a “neutral” rating in a research note on Monday, October 26th.

Of the 31 analysts who cover the stock, 18 rate it a "strong buy”, two rate it a "buy", eight rate it a "hold", one rates it a "sell", and one rates it a "strong sell".

Harvey’s Options Volatility Indicator

Conclusion

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

**OPTION TRADE: Buy the INTC Apr 2016 35.000 call (INTC160415C00035000) at approximately $0.60. Place a pre-determined sell at $1.20.

Note: No protective stop losses added -- but if you wish to do so make it $0.25.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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