Huge Collar Trades on Intel

Shares of Intel (INTC) are trading higher on the session by 1.31%, at $23.56. The stock has been ticking lower and lower over the past five months, correcting over 20% since early-May.   

With stock volume running above average for the past three sessions, as well as a textbook reversal pattern this morning, INTC may be at a near term bottom.

Options traders are not stepping up to the long side just yet, though. In fact, earlier in the session a large protective position traded in December.

The Dec $21 put was purchased 26,566 times, on the offer, for $0.45, while the Dec $25 call was sold 25,240 times, on the bid, for $0.47. This is known as a collar. 

Volume on each strike is now totaling over 43,000 contracts, making INTC one of the heaviest traded names today.

There could be one of a few things happening here:

If the trade was done in isolation, it is a highly leveraged downside bet that shares of INTC will continue lower into the end of the year.

If the trade was done as a hedge to an existing long stock position (time and sales data shows that no new long stock was initiated along with this trade), then the trader is voicing the opinion that shares are likely capped to the upside and that he or she would rather protect against further declines.

Near-term implied and historical volatility is registering 24% and 26%, respectively.

Intel Corporation designs and manufactures integrated digital technology platforms. A platform consists of a microprocessor and chipset. 

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