One Put, One Call Option To Know About for Intel

Consistently, one of the more popular stocks people enter into their stock options watchlist at Stock Options Channel is Intel Corp ( INTC). So this week we highlight one interesting put contract, and one interesting call contract, from the April expiration for INTC. The put contract our YieldBoost algorithm identified as particularly interesting, is at the $24.50 strike, which has a bid at the time of this writing of 38 cents. Collecting that bid as the premium represents a 1.6% return against the $24.50 commitment, or a 17.7% annualized rate of return (at Stock Options Channel we call this the YieldBoost).

Top YieldBoost INTC Puts »

Selling a put does not give an investor access to INTC's upside potential the way owning shares would, because the put seller only ends up owning shares in the scenario where the contract is exercised. So unless Intel Corp sees its shares fall 2.3% and the contract is exercised (resulting in a cost basis of $24.12 per share before broker commissions, subtracting the 38 cents from $24.50), the only upside to the put seller is from collecting that premium for the 17.7% annualized rate of return.

Worth considering, is that the annualized 17.7% figure actually exceeds the 3.6% annualized dividend paid by Intel Corp by 14.1%, based on the current share price of $25.07. And yet, if an investor was to buy the stock at the going market price in order to collect the dividend, there is greater downside because the stock would have to lose 2.27% to reach the $24.50 strike price.

If you liked this article you might like

Buying Nvidia Now Is Like Getting Intel Way Back in 1993, Jim Cramer Says

Google's Waymo Teams With Intel on Self Driving Technology

Amazon, Google and Other U.S. Tech Giants Face a Battle Over Taxes With Europe

S&P 500 and Dow on Track for Records With Markets in Good Mood Ahead of Fed

Cramer: Nvidia Is More Than Just a Pet Name