Put Selling Intel Stock has been highly profitable since I commenced back in March 2010. Intel Stock symbol is INTC and it trades on the NASDAQ. Recently Goldman Sacs had downgraded Intel Stock advising clients that the stock would fall 10% when the latest quarterly earnings were announced as they expected the slowdown in Asia and Europe to affect Intel’s earnings.
Instead Intel’s earnings were better than expected for the past quarter, and Intel raised their dividend once again. Intel did lower their outlook for the rest of the year’s earnings. Still though they expect earnings to be better than last year despite the slowdown in Europe and Asia. Select this Intel Stock link to read Intel Stock’s earnings reports.
Intel Stock Advance
The day after releasing the quarterly earnings Intel Stock rose to $26.42 but it closed off the highs for the day which is normally a sign that the euphoria is over and the last few investors who wanted the stock have bought and now the stock is going to pull back.
Put Selling Intel Stock On Friday July 20
On Friday I did more Put Selling on Intel Stock. I sold the August $26 put strike, which you can read about here.
I also was put selling the August $25 put options and I am preparing to do more put selling if Intel Stock continues to remain weak. I will also be considering buying and selling Intel stock should the conditions described further into this article occur as I hope.
I thought it would be interesting to take the 4 Steps I use to decide on which Trading Options Strategies to apply to a stock, which I discussed in my YUM Stock article and show how I used the 4 steps on Friday for Put Selling against Intel Stock.
Step 1: Intel Stock Support And Resistance For Put Selling
In the article I wrote on Intel Stock and Put Selling the $26 put strike I also discussed the Support and Resistance levels in Intel Stock and their importance for Put Selling.
The Intel Stock Support And Resistance chart below shows that there is little support between $24 to $26. There is of course some support, but no long-term support.
Long-term support lies below $24 and is probably down around $22.00. This concludes Step 1.
Knowing Support And Resistance in Intel Stock is crucial to successful Put Selling. The above is the 3 year Intel Stock Price Chart.
Step 2: Stock Technical Analysis of Intel Stock
Now that I know Support and Resistance levels in Intel Stock I can move to Stock Technical Analysis before commencing Put Selling.
I like to look at a few things when contemplating my next move in Put Selling or trading options of any kind. I look upon trading options and buying and selling stock as a game like chess. It requires a bit of work and planning prior to making my actual move. That way I am already prepared with the follow-up moves or in my case Put Selling Rescue Strategies.
Instead of looking out 3 years as I did in Support and Resistance in Step 1 I want to look at the Intel Stock Chart since September 2011 so I can pick out some interesting Intel Stock Volume levels.
Studying Volume changes in any stock is an excellent way to spot buying and selling among larger investors. This Intel Stock price chart since September 2011 is a good example.
In the fall of 2011 when the stock rose from around $20.00 to $25.00 volumes climbed. Notice how from that point on whenever the stock pulled back, Intel Stock trade volumes jump on each pull back. Basically all the dips were being bought.
In December 2011 when there was more selling in Intel Stock the selling was contained. In other words larger buyers were picking up Intel Stock. They supported the stock from $23.50 to about $25.00. So rather than their being a little support, perhaps there is more support around the $24.00 level than first realized when reviewing the 3 year Intel Stock Price Chart.
In January another short period of selling but the $25 valuation in Intel Stock was again contained.
In February 2012 when Intel Stock rose above $26 there was another spike in trading volumes. But then as Intel Stock continued to rise trading volumes declined. There was no large selling volume and limited buying. The larger institutional investors were not dumping their shares at $28.00. Obviously they believe Intel Stock has more upside potential.
Twice recently when Intel Stock pulled back in June and again on last Friday, volumes spiked on the downturn in Intel Stock’s price. There are large buyers here, and they are continuing to support Intel Stock.
So longer-term, when I look at just the past 10 months of Intel Stock volume, the picture looks a lot better for the $24 put strike. Therefore the $24 put strike should be an anchor for my Intel Stock strategy. If I wanted to use margin it would be for the $24 put strike.
The $25 and $26 Intel Stock put strikes are compelling for Put Selling, based on the chart but before deciding further let’s complete the remaining steps.
The last thing I want to do for Step 2 is look at the Stock Technical Analysis tools to get a better picture of short-term direction for Intel Stock.
For that I am going to use the Fast Stochastic, Slow Stochastic, Ultimate Oscillator, MACD Histogram, Bollinger Bands, and the 10 period simple moving average and 20 and 30 period exponential moving averages. I use these because I want the best possible advice on the direction of Intel Stock to stack the odds of consistent Put Selling profits in my favor.
Stock Technical Analysis while never perfect can assist in providing consistently profitable Put Selling trades.
I set the Bollinger Bands to 14 because I want to tighten up the time period. I can see that every time Intel Stock peeks through the lower Bollinger Band Intel Stock bounces back up.
The strategy I will use then will be to buy 1000 shares of Intel Stock when the stock hits the Lower Bollinger Band. But wait there is more.
The 10 day simple moving average has fallen over the 20 and 30 day exponential moving averages, which if you read this article on trading the moving averages, you will see that a crossover such as this is a signal to prepare for Put Selling Intel Stock.
I want to check the Ultimate Oscillator just to be sure there is no oversold reading. If the Ultimate Oscillator was oversold, then there is a good chance for Intel Stock to bounce. It isn’t oversold, so Intel Stock could fall further.
MACD Histogram is practically neutral with a divergence of –0.01 but it is negative so Intel Stock has room to fall further.
The Slow Stochastic however is not bearish but bullish while the Fast Stochastic is bearish. The Fast Stochastic is telling me that short-term, meaning Monday or Tuesday, Intel Stock could fall further. The Slow Stochastic is signaling that any fall further for Intel Stock should be short-lived. That means my window of Put Selling opportunity for Intel Stock Put Options may be just a day or two longer.
So now I have completed Step 2 and it is on to Step 3.
Step 3: Intel Stock Put Selling Investor
Step 3 is simple for me. I would accept shares at $26 and lower. Since I have no problem holding Intel Stock if assigned I have a distinct advantage for Put Selling Intel Stock. I can sell at the money and slightly out of the money put options. That means I can earn the largest put premiums available on Intel Stock.
Step 4: Intel Stock Put Selling Strategies
The final step is to pick the strategies I would use for Put Selling. In my case I have a couple of strategies I will be using.
A) I have already been Put Selling the Intel Stock $26 put options. I plan to continue Put Selling unless the stock should fall below $25. I would then stop Put Selling the $26 put options and roll my $26 puts down to $25 and further out in time. I then reassess for further Put Selling opportunities based of what the stock technical analysis tells me as to the direction of Intel Stock.
B) I also was doing more Put Selling on Friday at the Intel Stock $25 put strike. I sold just 5 naked puts at $25 for .45 cents. I will be taking my time Put Selling the $25 strike in small groups each time Intel Stock falls lower. As long as the stock technical analysis shows continued weakness in Intel Stock but not a prolonged severe pullback Put Selling the $25 put options in small groups at each pull back will be a great choice.
C) If Intel’s stock price should fall close to or below $25 I will take the opportunity to be Put Selling the $24 put options. If needed I will use margin when Put Selling the $24 strike as I previously did in July. When Put Selling the $24 Intel Stock put options I will be doing larger quantities as I did in July.
D) When Intel Stock hits the bottom of the Lower Bollinger Band I will check the stock technical analysis tools to determine if it is time to buy stock. I will use the Fast Stochastic timing tool to judge when the stock is so oversold that a bounce is imminent. To judge that for Intel Stock I will be watching for the %K to either match or move higher than the %D so the divergence changes from down to up. This Intel Stock trade will be a day or at most a couple of days trade only. As I already have been Put Selling against Intel Stock I do not want to own too much of the stock. The buying and selling of Intel Stock will be for trading purposes only and nothing more.
Trading Options Rescue Strategies Already In Place
With the above strategies in place I also know my options rescue strategy. My favorite options rescue strategy for naked puts is rolling down and out further in time. My Intel Stock $26 naked put options will be reduced to the $25 put strike, the $25 put strikes will be rolled to $24 and the $24 if need be will be rolled to $23. Basically I will be rolling my put options should the stock fall too low making covered call premiums not worthwhile to sell.
Normally when I roll options out and down I also reduce the number of put contracts with each roll.
Intel Stock Trades – Rescue Strategy
When I buy Intel Stock because the stock hits the lower Bollinger Band, but instead of bouncing back up, Intel Stock continues to fall, I would immediately sell in the money covered calls to help protect my position and assist in being exercised from my shares.
Using The 4 Steps For Put Selling Intel Stock Conclusion
I hope this article on Put Selling Strategies was of value to fellow traders. I cannot stress enough the importance of having a plan to be consistently profitable. You can see that by following the 4 steps I recently outlined in my Yum Stock trade for my Intel Stock trades, I am well prepared for Intel Stock to move sideways, higher or lower. It also shows that these simple 4 steps can be used for Put Selling against any stock.
The benefit for Put Selling through these 4 steps is that all the Put Selling I have done and will be doing into August has a solid plan behind it. There is no second guessing my moves and by having a rescue strategy in place before it is needed, I can sleep nights and keep income flowing into my portfolio.
Intel Stock Links
Review Intel Stock Trades For 2012
Review Intel Stock Trades For 2011
Review Intel Stock Trades For 2010