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Tony Zhang's Intel Trade Heading Into Earnings


On CNBC's "Options Action," Tony Zhang said he wants to sell the recent strength in Intel (NASDAQ: INTC). He noticed a double top formation on its chart as the stock got rejected at $68 last week and he also sees some fundamental issues.

When you look at Intel relative to its sector, the stock has underperformed the sector since June 2020, and Zhang sees that as a factor for fading the recent strength. Intel continues to come under pressure in its two main businesses, said Zhang.

On the data center side, NVIDIA (NASDAQ: NVDA) and Arm Holdings are starting to muscle in on the 85% market share Intel currently owns, said Zhang. AMD (NASDAQ: AMD) with Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM) are starting to beat Intel both on price and performance in the PC chips segment.

The company is going to report earnings on Thursday and the market is implying a move of 5.8%. The stock has moved around 7.9% on average on the event, over the last eight quarters.

Zhang wants to sell the May $65/$70 call spread for a credit of $1.68. The trade allows him to make a profit if the stock stays below $65 and it breaks even at $66.68. It can maximally lose $3.32 if the stock jumps to $70 or higher by the May expiration.




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Posted-In: CNBC Options Action Tony ZhangOptions Markets

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