Filed under: Major movement, Analyst upgrades and downgrades, Bad news, Industry, Intel (INTC), Options, Technical Analysis
Intel Corp. (NASDAQ: INTC) stock is trading lower this morning after an analyst at Banc of America Securities downgraded the stock to “Neutral” from “Buy,” pointing to weak seasonality in the first half of 2008. Banc of America downgraded seven other chipmakers, including Advanced Micro Devices (NYSE: AMD) and National Semiconductor Corp. (NYSE: NSM), taking a more cautious stance on the semiconductor industry due to slightly higher inventory levels, the likelihood of weak seasonality, and a potential macroeconomic slowdown. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on INTC.
After hitting a one-year low of $18.75 in March, the stock hit a one-year high of $27.99 in December. So far today the stock has hit a low of $25.38 and a high of $26.34. As of 11:05, INTC is trading at $25.47, down $1.19 (-4.4%). The chart for INTC looks bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $30 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make an 11.6% return in 4 months as long as INTC is below $30 at April expiration. Intel would have to rise by more than 21% before we would start to lose money.
Continue reading Intel (INTC) loses ground on industry-wide downgrades
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