Intel's Shares May Jump After Results Despite Weak Outlook

Summary

• Intel's stock may finally be recovering after a rough patch.
• Options trades suggest higher prices to come.
• Technical charts have also shown improving trends.
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Intel (NASDAQ:INTC) will report results on Thursday, October 22, after the close of trading. It is not expected to be a great quarter for Intel, with earnings set to decline sharply on weak revenue. However, some traders are betting that the worst may be over for Intel, and the stock surges. Additionally, Intel's technical chart has improved dramatically and suggests higher prices may be on the way.

Results

For the third quarter, analysts see revenue falling by about 5% to $18.2 billion, while earnings are expected to collapse by 22% to $1.11 per share. Forward guidance is also essential for Intel as it has been in the past, with analysts looking for revenue to fall by 14% in the fourth quarter to $17.3 billion, as earnings collapse by nearly 30% to $1.07 per share. Of course, there will also be a great deal of attention around any updates that Intel may provide around its 7-nanometer chip that has been delayed many times over the past few years. These delays have allowed competitors such as AMD (AMD) and NVIDIA (NVDA) to move in and capture some market share from Intel and some of its key business lines, such as the data centers.

Betting On A Rebound

However, some traders are betting that the worst is over, and potentially the shares will rebound. On October 12, I first noted in my subscription service that the open interest levels for the December 18 $50 calls and puts rose by 15,000 contracts and 11,000 contracts, respectively. The data shows the calls were bought for roughly $4.70 per contract, while the puts were sold for about $1.90 per contract. Therefore, the stock will need to be trading above $52.20 by the expiration date for a trader to earn a profit. The stock is currently trading above that price at around $54 on October 19, meaning that the

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