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Traders see big moves for Intel off of earnings

With Intel scheduled to report fourth-quarter earnings after the bell Thursday, options traders are expecting to see a notable reaction in the tech giant's stock price.

On Wednesday, the options market implied a 4.5 percent one-day move for Intel, based on January options that expire Friday. That's much larger than the stock's average post-earnings move of 2 percent over the past four quarters.

Traders can find the magnitude of expected moves by examining options prices. Specifically, the implied move is considered to be the price of simultaneously buying a call option and a put options that are both "at the money," which would be a way to make an outright bet on a move higher or lower for the stock.

In this case, with Intel trading at $32, buying the January 32-strike call and the January 32-strike put would cost about $1.50. This particular trade will thus be profitable if Intel shares move more than $1.50 in either direction — or about 4.5 percent from current prices — by expiration Friday.

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However, on CNBC's "Fast Money," Dan Nathan cautioned investors against actually going out and buying these two options, which would be collectively known as a "straddle."

"If you're looking to add protection to a long position or speculate to the downside, buying at-the-money straddles and buying implied moves are generally losing strategies into events like this," Nathan said Wednesday. "I am leaning into the short side, but I am doing it with defined risk."

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