Bullish option traders more than doubled their money in Intel today.
On Feb. 27, Investitute’s tracking systems detected the purchase of 7,900 May $52.50 calls for $1.29 to $1.90 with shares at $50.77. These were clearly new positions, as open interest in the strike was only 796 contracts before the activity appeared.
Those calls traded as high as $3.50 today, more than 2.5 times their original purchase price. The stock rose 5.6% in the same time frame, showing how options can far outperform their underlying shares. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
INTC was up 0.51% today to close at $51.78. The chip maker was seen as benefiting from the presidential order banning the merger between two of its main rivals, Broadcom and Qualcomm.