Intel's (INTC) Stock Slump Offers Quick-Hit Bullish Options Trade

Business Insider

a day ago

While the semiconductor industry has generally enjoyed a positive outing, one notable negative standout is Intel (INTC). Once an iconic powerhouse, the chipmaker has been struggling to keep pace in hot segments such as artificial intelligence. Subsequently, INTC stock is conspicuously down roughly 4% since the beginning of this year, a far cry from the Nasdaq Composite index, which is up nearly 7% during the same frame.
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Adding to the frustration, the volatility can't be blamed on a lack of effort by management to right the ship. Late last month, the semiconductor company reported relatively decent second-quarter financial results. True, Intel posted a loss per share of 10 cents, missing Wall Street's consensus view calling for a profit of a penny. However, revenue landed at $12.6 billion, ahead of the consensus estimate calling for $11.92 billion.
As well, the leadership team stated that it expects revenue for the current third quarter to hit $13.1 billion, noticeably higher than analysts' consensus target of $12.65 billion. However, the market didn't seem to respond kindly to management's disclosure of its anticipation of breaking even on earnings. In contrast, analysts were looking for earnings per share of 4 cents. The broader picture on INTC is now clear: the tech giant has seen its earnings profile crater since 2023.
Still, it should be noted that Intel is seeking to be a much leaner and more efficient enterprise, with new CEO Lip-Bu Tan announcing significant cuts in chip factory construction. Further, Tan also stated that the tech firm had completed the majority of its planned layoffs, which amounts to 15% of its global workforce.
Thanks to a combination of fundamental streamlining and an intriguing quantitative signal, INTC stock could be worth a closer look for speculators.
Decoding the Confusion Around Options Strategies
It's no surprise that options trading has grown immensely in popularity — but with that popularity comes a tidal wave of confusion. Newcomers are often bombarded with dense terminology: delta, gamma, theta, vega, rho — a seemingly endless parade of Greek letters that reads more like a fraternity roll call than a path to financial opportunity. And that's before even diving into volatility metrics, like implied versus historical volatility, or the cryptic signals around so-called unusual options activity.
While these concepts can offer valuable insights, they can sometimes obscure the bigger picture. What matters most — and what gives options their real power — is how you interpret market behavior in a way that's both intuitive and actionable. That's where a different lens becomes incredibly useful.
Most of the financial theory surrounding options falls into one of two categories: prescriptive or descriptive. The former deals with determining the price of an option based on mathematical models. These models — often built on complex stochastic calculus — attempt to define fair value, risk, and pricing in the abstract.
But descriptive approaches take a more grounded view. Instead of asking what should occur, they examine what has occurred and under what conditions. It involves a more intuitive mindset, looking at how the market reacted under similar patterns or sequences in the past and applying those probabilities forward.
Descriptive logic doesn't try to predict in the traditional sense. It just observes, classifies, and responds. And that's precisely how people make most real-world decisions: not from a formula but from pattern recognition.
By focusing on descriptive setups, options traders can bypass the clutter — and possibly spot distinct patterns where the odds quietly shift in their favor.
Turning Theory into Practice with INTC Stock
Essentially, just about the only objective truth we can rely upon universally is that, at the end of the day, the market is either a net buyer or a net seller. By scaling this logic into a preferred temporal unit, we can use the power of past analogs to better determine forward outcomes.
For example, in the last 10 weeks, the market voted to buy INTC stock four times and sell six times. During this period, the security took a downward direction. For brevity, we can label this sequence as 4-6-D. From here, we have a distinct, falsifiable behavioral state. Going back to the end of our dataset (January 2019), we can count that, on a rolling basis, this sequence materialized 59 times.
Even better, we can list out all the major sequences with a sample size greater than 10 to help formulate a decision-tree logic:
Using the table above, we can determine that the probability of a long position in INTC stock being profitable on any given week is 50.73%. This is effectively our null hypothesis, the assumption of no mispricing. However, our alternative hypothesis is that, because of the 4-6-D sequence, the chance of upside in the following week is actually 59.32%. Therefore, the deck of cards is hot in our favor.
Assuming the positive pathway, the expected median return is 3.47%. If the implication of this sequence holds up, INTC stock could reach $19.98 very quickly. Almost certainly, if INTC gets to that point, the bulls will be tempted to push the price beyond the $20 level (and perhaps beyond) due to the psychological pull.
To be fair, the mathematical model above of compressing price action into discrete states may look unwise. However, keep in mind that a month earlier, I made the bullish case for INTC stock because it was flashing the 6-4-U sequence.
At the time, I said the 22.50/23.50 bull call spread expiring July 18 was a compelling idea. INTC stock closed at $23.82 on July 10, which allowed spread holders to sell early, reducing their costs due to the extra remaining time value. Or, they could have held to expiration, where INTC closed at $23.10, a bit shy of $23.50 but above the breakeven price of $23.02.
In this go-around, I'm intrigued by the 19/20 bull call spread expiring Sep. 5. This transaction involves buying the $19 call and simultaneously selling the $20 call, for a net debit paid of $52 (the maximum loss). Should INTC stock rise through the short strike price of $20 at expiration, the maximum profit is $48, a payout of over 92%.
However, if you're really in a thrifty mood, take a look at the 19.50/20.00 bull spread expiring Aug. 15. It expires within two weeks, but the $22 debit you pay could turn to a $28 profit, a payout of over 127%.
Is Intel a Buy, Hold, or Sell?
Turning to Wall Street, INTC stock carries a Hold consensus rating based on one Buy, 25 Holds, and three Sell ratings. INTC's average stock price target is $22.25, implying 14% upside potential over the next 12 months.
Intel's Difficulties Create a Tradeable Investor Opportunity
Let's be honest — Intel's fundamentals aren't winning many fans right now. While management has rolled out new initiatives and set the company on what could be a better path, investor skepticism around INTC stock remains warranted. That said, it doesn't make the stock untradable. In fact, using a data-driven, quantitative approach, there's a compelling short-term case to be bullish on the chipmaker.