EOT Trade Alert – May 13, 2009

| May 13, 2009

May 13, 2009

Trade Alert:

   Buy INTC October 2009 $16 Calls at $1.40 or better (NQJQ)

Company Background:

Intel (INTC) is a semiconductor chip maker.  The company develops the advanced digital technology found in all types of products.  If there’s a chip in it there’s a good chance it’s, we’ve all heard the slogan, Intel inside.

Short-Term Catalyst:

Intel’s CEO just came out and said the 2nd quarter is looking ‘better than expected’.
This bit of positive guidance should be all that’s needed to spark interest in their shares.

You see, when they announced earning back in April they didn’t give much, if any, guidance.  They left investors hanging.  If the company didn’t know what to expect, how are we supposed to know what this quarter will bring.

But they’ve changed their tune a bit.  It sounds like things are looking up.

Here’s what’s driving their sales.

Manufacturers use Intel’s chips to make their gadgets and gizmos work.  They were smart enough to cut back production as the economy worsened.  This caused Intel’s sales and revenue to fall off sharply.  Therefore, investors sold off the stock.

Now inventory levels are low.  Sales are picking up as manufacturers rush to refill them.  Consumer and business spending is starting to tick higher.  That will drive sales even higher.

All good news for the stock.

Trade Details:

Option Ticker Symbol: NQJQ
Underlying Stock Symbol: INTC
Current Bid-Ask Price: $1.26-$1.28
Option “Buy Up To” Price: $1.40
Break-Even On Stock At Expiration: $17.40
Maximum Risk Per Contract: $140

Exit Strategy:

INTC is trading at $15.12 per share.  Resistance levels will be at $16.80 and again at $19.  Remember, we want this stock to move higher.  Support levels will be at $14 and $12.75.  Conservative investors should look to exit at the first support or resistance level.  Aggressive investors may want to hold for a bigger move.



Category: EOT Trade Alert

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