Derivative Trades Off Of Intel's Earnings (INTC)
Now that Intel (NASDAQ: INTC) has reported the blowout quarter that many observers expected, traders should consider looking at some derivative trades that might benefit from the strong sentiment in the semiconductor complex. Many of these names are moving higher in the after hours as fast money traders position themselves to benefit from the strong sector trends evidenced by INTC's earnings numbers.
The Semiconductor HOLDRs ETF (NASDAQ: SMH) is one of the easiest ways to go long the entire sector in the wake of Intel's earnings. In the after hours session, the SMH has jumped 2.48%. Consider getting long this ETF in the after hours market, but if semiconductor stocks don't follow through with a strong performance tomorrow, it could mean that traders are "selling the news," and the position should be exited immediately at a (hopefully) small loss.
Another name moving higher after the Intel report is Marvell Technology (NASDAQ: MRVL). That stock has gained 1.72% in the after hours and is currently trading at $21.30. If the semiconductor complex continues to move higher in the coming weeks, this stock could give you a lot of bang for your buck, as it is a higher beta play than some of the larger names.
On Fast Money tonight, the traders suggested that NVIDIA (NASDAQ: NVDA) could also be a good derivative play off of Intel. That stock has already made a big move today, gaining 2.08% in the normal trading session, and then adding another 2.49% in the after hours market.
Advanced Micro Devices (NYSE: AMD) is another company that will likely benefit from the same trends that can be evidenced in Intel's strong earnings. Shares of AMD have gained 2.62% to $9.81 in the after hours.
Any number of derivative plays off of INTC will work if there is follow through in the market. Last quarter that did not happen, and INTC's strong earnings coincided with the start of a major sell off. Watch all of these names closely in the coming days. If the market intends to bid the semiconductor complex up, we should see big volume and advances in most of these names. If you decide to go long some of these stocks, be very wary of any weakness in the coming week. Quantify a dollar or percentage amount that you are willing to risk, and set a stop loss at the corresponding level in the stock's price. If Intel's strong earnings catalyze the semiconductor stocks higher, you will make a tidy profit. If, however, the action in the after hours is just a head fake, you will limit your losses and preserve capital to take advantage of the next opportunity.
