Selling Intel Puts on Its Emerging Market Potential

I started selling some Intel (INTC) August puts today.

I am just starting to move into INTC by selling the AUG 14 puts starting at a price of .37 each and with 5 contracts. I normally start very small with my swing trading when it's to the long side as world events can hand you a very crushing blow from time to time.

Intel has a world presence and regardless of the state of the American balance and trade balances, Intel should be a winner if any part of the world starts to take off again. It's hard to imagine that somewhere in the world, especially in Asia, where they are still growing, that Intel will not be able to exploit the profit potential. Intel, as many know, is the leader in its field and a household name in much of North America and Europe.

Getting Intel inside the heads of the multi-billion population in Asia is already well on its way. Just about every trip I have taken in recent years to Japan and China has allowed me to go into the shopping centers and I have seen the marketing materials that Intel displays.

Other reasons I like Intel include the dividend it pays out as well as a PE that I also think will allow a lot more money to come into this stock without driving it into an unrealistic / unsustainable level.

My preferred method of entering into stocks for swing trades is to sell out of the money puts for the second nearest month. While this method limits the profitability, it also lowers risk and allows for some forgiveness in actual timing of entry with premium received.

Disclosure: I am short INTC AUG Puts

Comments

[Don Martin:]

I like this call and took a similar position a couple of weeks ago:

xderivatives.blogspot....

My only concern about this exposure to Intel is timing the cap ex cycle. Intel will obviously benefit greatly once the corporate purse strings are loosened and capital goods orders pick up. I just don't know whether that surge will come later this year or some time in 2010.

Jun 24 07:23 AM

[bschu:]

Intel is the 800 lb. gorilla in the chip world and has an almost impregnable "barrier to competition". Selling puts is a great way to buy a long term hold at a good price and make some extra coin in the process. I own INTC and for the short term, I sold the Oct 20 calls because I see a bleak remainder of 2009.

Jun 24 08:47 PM