Intel (INTC) has reached a strong support area and we could see it move up soon. It may not move far, but it has the potential. As a dominant leader in the CPU market, we are watching the company slowly but systematically evolve. It knows the future is in the mobile application processor market. By 2015 the AP market is expected to almost catch up with the CPU market as mobile devices outsell desk tops. Intel is slowly moving into this field and positioning itself for the future. One can see this by its latest acquisition.
Intel Positions itself for the next wave of Touch Screen Technology
Intel recently invested in a company called FlatFrog Laboratories that is a Touch screen technology developer. Just for a quick back ground-present touch screens are based upon capacitive electronic fields that respond to conductive material like the human finger. If a stylus is to be used with the screen, its tip must be coated with a conductive material in order for it to work. FlatFrog is researching something called PSD technology based on optics instead of the traditional capacitive electronic. It uses algorithms to track light that travels inside the cover glass of the screen. The long name for the technology is called Planar Scatter Detection. By detecting hundreds of simultaneous touches or drags on the screen this technology is far more adaptive than the present capacitive. Touch screens based on PSD detect not only input from bare fingers, but also from gloved fingers, passive styli and many other common objects such as pencil erasers. Intel is positioning itself well. Creating a advanced touch screen with a low price point that can be used in large and small devices is not an easy task, but when finished, it will be a welcomed advance in touchscreen technology that Intel has a hand in.
This is a smart move for the future. And while I see this (and other moves) by Intel as signs that it will continue to be a strong player in the semiconductor global market, I also see a short term income opportunity based upon where the stock is presently sitting.
The Options Play
Since the stock has slid up the top of the Bollinger band, I am expecting it to possibly move sideways a bit in a short trading zone. This will not be for a long time. This gives a chance for a possible quick short term money play. I like buying at the money on a Bull Call Spread here.
- Buy an August 2012 call with a strike of '27' (priced at $0.89)
- Sell an August 2012 call with a strike of '28' (priced at $0.45)
- Net Debit to Start: $0.44
- Maximum Profit: $0.56
- Maximum Risk: net debit
- Maximum Length of Play: 2 months
Reasoning behind the Play
- Intel has a positive divergence going in the MACD which signals a reverse in direction.
- Not sure if the stock will continue to move up now but is very close to strong support.
- Buying (ATM) is so close all we need is a slight move up for the option to advance in price.