Chip stocks have been climbing, but one trader says this large-cap name is about to sink.
"I think Intel is overbought and due for a sell-off," Andrew Keene told CNBC's "Trading Nation" on Monday. The stock has surged 10 percent in the last month, making it one of the best performing Dow stocks during that time. "We've had this nice run off the low, but we are finding sellers here at $32."
For Keene, that is reminiscent of the activity seen around the $32 mark in January, before the stock took a leg lower. "I think that is going to serve as resistance," the founder of AlphaShark Trading said. "I think Intel is heading lower."
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Furthermore, Keene said that on the longer-term chart, Intel is hitting resistance at its 100-week moving average.
To play for the decline, Keene is buying the April 32/31 put spread for 25 cents each. This is a bearish strategy where a trader will buy a put and then sell a lower strike put of the same expiration to offset the cost. The goal is for the stock to fall to the strike you are short or in this case $31 by April expiration. That's more than 4 percent lower than where the stock is currently trading.
"If Intel can end up at $31 or lower, I can end up with 300 percent returns within three weeks," he said.
Wall Street analysts tend to disagree with Keene's thesis that Intel shares could fall — of the 44 that cover the stock, the average price target is $36.07 with an overweight rating.