IB Options Brief: Intel Corp. (INTC) & Shuffle Master, Inc. (SHFL)

Posted September 10th, 2012 by Caitlin Duffy in Unusual Activity

INTC – Intel Corp.

Shares in chip giant, Intel Corp., are getting hit today on concerns the company may need further cuts to guidance following Friday’s downward revision to its third-quarter revenue forecast. The stock is down 3.3% this afternoon to stand at $23.40 as of 12:30 p.m. ET, adding to a more than 4% drop in the price of the underlying on Friday. Trading traffic in INTC weekly options are mixed, with some strategists positioning for a rebound in the share price, while others prepare for further weakness in the near term.

Options traders positioning for shares to reverse course this week snapped up around 4,400 calls at the Sep. 14 ’12 $24 strike for an average premium of $0.18 per contract. Call buyers stand ready to profit at expiration in the event that Intel’s shares rally 3.3% to top the average breakeven price of $24.18.

Meanwhile, buyers of around 1,100 of the Sep. 14 ’12 $22.5 strike put at a premium of $0.05 apiece make money if the stock continues to pullback. The bearish position may pay off at expiration this week if Intel’s shares slide at least 4% from the current level to settle below $22.45. Intel’s third-quarter results are expected out after the final bell on October 16th.

SHFL – Shuffle Master, Inc.

Call options on global gaming manufacturer, Shuffle Master, Inc., are more active than usual this afternoon ahead of the company’s third-quarter earnings report after the final bell. Shares in the maker of casino games and other entertainment products are up 1.4% at $15.45 as of 1:20 p.m. ET.

Options traders appear to be initiating largely bullish bets on Shuffle Master prior to the earnings report, with the Sep. $16 strike call seeing the most volume in the first half of the session. More than 1,100 of the $16 strike calls have changed hands so far today and it looks like most of the contracts were purchased for an average premium of $0.62 apiece.

Call buyers may profit at expiration in the event that shares in Shuffle Master soar 7.5% to exceed the average breakeven price of $16.62. Bullish positioning spread to the Oct. $17 strike where 185 calls were picked up at a premium of $0.45 each. Traders long the $17 strike calls make money as long as SHFL shares top $17.45 at expiration next month.

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