12/20/2020 Plan:
This week, we return to Intel (Ticker: INTC) after it dropped significantly on Friday.
12/20/2020 Plan (continued):
- INTC – Sell January 8th 43.5 put for 0.34 OR
- INTC – Sell January 8th 44.5 put for 0.48 OR
- INTC – Sell January 15th 45/43 put spreads x2 (or 3) for 0.37
- Prices are as of market close 12/18/2020, actual fill and strikes may differ depending on Monday’s open, post will be updated accordingly.
- All trades are for educational purposes and do not constitute advice
12/20/2020 Commentary:
Intel dropped on news that Microsoft (Ticker: MSFT) is working on developing their own chips. This, in addition to Apple and Nvidia also developing their own chips, has weighed on Intel. The drop was coupled with a spike up in Implied Volatility and the trades this week assume that the name will settle down.
I’ve recommended Intel in the past, but this time is a bit ‘different’ as MSFT has deep pockets and if their servers do switch away from Intel, that could be a longer term issue for Intel. However, there is a difference between “developing” and “producing”. I expect Intel will once again bottom out in the near future and grind a bit higher, a nice market for selling puts.
If there is significant follow-through on Monday, I will probably Not put this trade on until it settles down a bit.
The 43.5 put is prices below the recent low at the end of October. Despite the lower premium, I like this trade the best. You must be willing to take the shares, though. The 44.5 offers a bit more premium, and clearly a higher percent chance you’ll be assigned.
The 45/43 put spread is for a trade and Intel has stayed above 45 for the vast majority of the year.
As we get to the end of the year, with 2 holiday weeks in a row, trading volumes tend to be a bit lighter. I will be putting on less trades for the next couple weeks. It is a good time to review your portfolio and close positions you don’t want to keep for the new year. Please remember that the market closes this week at 1PM on Thursday and doesn’t open again on Friday.
Reach out with any questions on this or any other trade!
12/21/2020 Entry:
Big sell off this morning and the market is starting to climb back.
We sold the INTC Jan 8 42.5 put for 0.30.
For a spread, consider the Jan 8 43.5/41.5 for 0.25+
With the market turbulent and down on the day, ok to pass on this one until the market stabilizes a bit.
12/27/2020 Update:
Intel has started to grind back and was up on the week. The put spreads are already down to 0.07, the naked put down to 0.08. These can be closed at any time – the last few cents will be ‘stubborn’ this week, with little decay unless INTC really takes off.
1/4/2021 Update/Close:
As discussed during last week’s update, these could be removed for very little at any time. I closed took off most of my position on Tuesday for 0.02 to do a bit of ‘year end clean-up’. If you didn’t, simply take them off this week. Another great win for our members!
