Intel could break out on earnings, here’s how to trade it

Chipmaker Intel reports earnings on Thursday, and that has Todd Gordon of betting on a breakout for the stock.

"Intel has been consolidating here in November, December and into 2018," Gordon said Tuesday on CNBC's "Trading Nation." "I think it's high time that Intel continues on up in the direction of the chips, and earnings could exactly be the catalyst we're looking for."

Intel has surged 6 percent in the last week, coming back after tanking to start the year on reports that its processors had a security bug. The recent rally has Gordon convinced that the chipmaker could break through the $46 upper range of the consolidation he sees on his chart.

As a result, Gordon wants to sell the Jan. 26 weekly 46-strike puts, and pair that with the purchase of the Jan. 26 weekly 44-strike puts, which gives him a credit of 73 cents, or around $73 per options spread.

The trader chose to sell a put spread heading into Intel earnings thanks to the increase in implied volatility, or the price of options, leading up to the event.

The trade has a breakeven point of around $45.22, above which Gordon would make money on the trade should Intel close above that point. If Intel closes above $46 on the Jan. 26 expiration, Gordon would make the $73 credit on the trade. But if Intel were to close below $44, he could face a maximum loss of $126.

Intel was trading at just above $46 on Tuesday, meaning that Gordon is in a prime position to earn the $73 credit on the trade should the stock remain above that key level.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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