Intel Corporation (INTC) is scheduled to report earnings after the markets close on Thursday, January 14, 2016.
Last quarter, the stock had the following price movement after reporting earnings:
Oct 14, 2015
Oct 13, 2015
(INTC) is a stock that historically does not make too much of a price move after reporting earnings. Also, tomorrow is expiration Friday, so using a strategy that takes advantage of time-decay and a lack of a large price move is the right strategy to use. For this trade, I will be placing a Neutral Calendar Spread. The current Implied Volatility On the January 2016 expiration (the sell side) is at 114, while the February expiration is only 31. This is always important when looking at the Neutral Calendar Spread: the discrepancy in the IV. It is a great indicator to show an overpriced option (the sell side). I am giving this trade a 10/10. It should profit immediately tomorrow morning, which is when I plan to close it out.
Here is how the trade is placed:
Sell -25 INTC Jan16 32 Call
Buy 25 INTC Feb16 32 Call
Greeks / NBBO
NBBO 0.35 – 0.41. Try to pay 0.38 or less for this trade. At a maximum, pay up to 0.40. See the attachment for the profit/loss chart.
I will post the close order price tomorrow pre-market before the opening bell.
Update 1: 9:20 am EST: Pre-market, the stock is down 2.10 a share. I am expecting the stock to make a recovery during the day. I am placing the order to close this trade out at 0.65. I will update any changes here, if needed.
Update 2: 0.60 STC
Update 3: STC at 0.50.