The Funky Fly Lands on INTC

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The Funky Fly Lands on INTC

Post-earning trade is one of my favorite times for a stock.  The news is really is inconsequential except when put against the underlying movement.  I do think stocks tend to trend a bit after earnings (no science behind that, just observation) but what happens when the report lands with a thud?  The name is kind of directionless and I think that too is a trade.  There are ways to make money on stocks that go nowhere using options.

Letís take INTC earnings.  I thought they were ok.  The Street did not like them but right now The Street just likes AAPL.  At this point looking at INTC trade it is a name that looks to be going nowhere fast.  Take a look at the blistering realized volatility in INTC over the last few months.  The 30 Day Historical actually crossed 15% to the upside at some point.  I think this earnings report will produce more of the same (full disclosure: I own INTC shares).

Livevol  www.livevol.com

Slow moving stocks are generally ripe for Iron Butterfly type trades where the stock is not expected to do much.  INTC has spent most of 2012 pinned to $27.  I actually think the shares can do better.  After all, INTC was up around 15%+ in 2011 not counting dividends which was pretty good for 2011.  The trade shape for me looks like the Funky Fly (extra long calls, more out of the money long put, short straddle) just in case the name catches a bid from now until June.  These trades produce very low theta, long deltas without the larger risk of a pure put spread and if nothing happens you can cash in.


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