The Truth Will Set You Free

Sometimes those juicy rumors turn out to be false, making the put-buyers run for cover.
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Nothing like a "product is late/product is not late" short squeeze. Yesterday we saw one in Hewlett-Packard (HWP) , when the stock jumped 6 points when an analyst squawked that HWP was shipping a next-generation product on time.

I know, that seems like a bit of ho-hum, unless you had gotten the call the day before that the product was late. That juicy rumor morsel brought out short-sellers and put-buyers galore. Both teams hit the retaining wall going 200 miles an hour when the truth -- ready and on time -- came out.

Now we might see a smaller squeeze in

Intel

(INTC) - Get Report

. I am buying calls and common stock in the name after the company just denied that its Merced chip was late. I had seen press reports indicating that this next-generation chip was tardy, and I figure people must have been betting against the chip giant on that bit of false news.

It won't be as good as Hewlett, because there were so many people betting against it on execution problems, but the Merced news could get Intel going.

Such are the hazards of short-selling. You will hear something that sounds so convincing, so positively, well, negative, that you have to buy the puts.

And then you find out the truth, and you have no choice but to cover ahead of what might be good earnings.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Intel. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.