Tuesday, April 26, 2011

Intel - Covered Calls

Intel reported very strong earnings about a week ago. IMO their report just re-enforces the view from the original CCI post about this stock that analysts seem obsessed with the low-margin, very competitive chip market for phones/tablets while Intel just keeps on dominating the high margin, server market that is the backbone of the cloud. The link below is to an interview with Intel's CEO from CNBC. He is even obviously even more biased than CCI, but I think he does an excellent job of laying out Intel's story. Its 10 min long, but is good to watch if you want to hear the pro/con between the company and the analysts. From there you can decide for yourself if the story is worth an investment.


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As previously documented, the portfolio is long several lots of Intel at an average price of $20. The stock has lingered there for a long time. Since earning the stock has gone mostly straight up 10% and today hit $22.50. While still bullish on the stock, it seems to have come real far, real fast. I sold one lot of June $22 calls against the position for $.84

1). Stock down - My main thought/plan/hope is the stock will retrace some of its big recent gains back towards chart support around $22. In this case, an opportunity to harvest some option gains to increase yield will present themselves.
2). Stock Up - The stock continuing to go hyperbolic is actually my "Worse Case" as one lot of a stock which I have a bullish long term view will be called away. Of course, that will be at a reasonable profit, and the other owned lots will have a better gain. As they say, "no one ever lost money taking profits". Also, it would seem very possible an opportunity to replace the lot will present itself at some point.

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