Is Dell's Pain Intel's Gain?

Call it Schadenfreude, tech style. Dell sharesare off about 8% today after CEO Michael Dell announced yesterday that rising costs were weighing on margins. But could Dell's pain be Intel's gain?

"What Dell management more or less told you was that components are costing them more, and that could be a positive trend for Intel," said Dan Nathan, Chief Options Strategist at Phoenix Partners and the unofficial muse for Ryan Seacrest (this after only three month of being on "Options Action"!!!).

Follow All The Earnings News Here On CNBC.com

On Intel's last earnings call in April, management signaled that it was seeing a bottom for the PC market. With Microsoft set to release its much anticipated Windows 7, an upgrade cycle may be in the offing. Throw in last night's bullish outlook from Novellus, and we could be in for a fun after-hours session.

Currently, option prices are calling for a 5% move after earnings, slightly more than its four-quarter average of move of 3%.

With the company minutes away for releasing results, Nathan suggests taking a cheap shot on a big move one way or the other, buying the July 16/17 strangle for $0.45, a bet that pays off if Intel stock trades above $17.45, or below $15.55.

Questions, comments send them to us at: optionsaction@cnbc.com

Contact Options Action

  • Showtimes

    Fridays, 5:30p ET
    Saturday, 6a ET
    Sunday, 6a ET
  • Melissa Lee

    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

Sponsored Related Links

More on thinkorswim by TD Ameritrade

  • Make sure you’re always keeping up with the market with up-to-the-minute news and breaking stories. Move on possible breakout stocks and options with potential opportunity. Plus, get in-depth analysis on futures and forex in one seamless, integrated experience. Join TD Ameritrade and trade commission-free for 60 days + get up to $600 cash.