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Intel Leaps Over Tesla to be Second Most Active Stock Option: Options Chatter
$Intel (INTC.US)$ options volume jumped above that of $Tesla (TSLA.US)$ Tuesday amid reports that the semiconductor company could be broken up under potential deals with $Taiwan Semiconductor (TSM.US)$ and $Broadcom (AVGO.US)$.
Trading volume on Intel call and put options more than doubled to about 1.3 million contracts as of 2:22 p.m. in New York, compared with its 20-day average, exchange data compiled by Bloomberg show. That made Intel the second most active stock option, grabbing the title that has been previously dominated by Tesla. Staying at the top is $NVIDIA (NVDA.US)$.
(To see Intel's options chain, click here. For the options ranking led by Nvidia, click here.)
The heaviest trading so far are in calls that give the holders the right to buy the stock at $26 by Friday, with 85,390 contracts changing hands. That exceeded the 51,210 outstanding contracts, also known as open interest. That call option is now in the money after the stock surged past that strike price, jumping almost 12% to $26.41.
Over the weekend, the Wall Street Journal reported that Intel's rival Broadcom has informally discussed with its advisers the potential of making a bid for Intel's chip-design and marketing business, although it would only pursue that if it finds a partner for Intel's manufacturing business.
The newspaper also reported that TSMC has studied taking a controlling stake or buying all of Intel's chip plants, likely as part of an investor consortium or other structure. However, a White House official said President Donald Trump is unlikely to support a deal that involved a foreign entity operating Intel's factories, according to WSJ's report. Broadcom and TSMC aren't working together, it said.
While the companies have yet to confirm the report, the prospects of a breakup spurred optimism for the stock that has been left in the dust by peers amid the craze over artificial intelligence (AI) and surging demand for semiconductors that power the technology.
Even after Tuesday's gains, Intel shares are still down 41.6% from a year ago, compared with an almost 18% gain for the $PHLX Semiconductor Index (.SOX.US)$ and the $S&P 500 Index (.SPX.US)$'s 23% rally.
The WSJ report came a day after Bloomberg reported that TSMC is considering taking a controlling stake in Intel’s factories at the request of Trump administration officials. Last week, Baird analyst Tristan Gerra was quoted by The Fly as saying that there are discussions in the Asian semiconductor supply chain on the potential for the US government to step in to encourage TSMC to help ensure the viability of Intel's fab and manufacturing projects.
Investors could start looking at valuing Intel's different businesses as standalone entities, as they assign a higher probability to a potential breakup, Bloomberg quoted Evercore ISI analyst Mark Lipacis as saying Tuesday. Intel's assets are "conservatively" worth almost $119 billion, WSJ quoted Northland Capital Markets analyst Gus Richard as saying. That's higher than Intel's current market capital of $113.8 billion.
"The price paid for those assets would potentially be very low relative to book value, particularly in a potential scenario involving a reluctant acquirer, motivated by geopolitical pressures," Morgan Stanley analysts including Joseph Moore wrote in a note to clients Tuesday.
Share your thoughts on Intel, TSMC and Broadcom in the comments section. Which company do you see benefitting the most if this deals go through and why? Let your voice be heard by voting below. Follow me here to read more options columns.
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Luzi Ann Santos
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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104563507 : tq genk
Jayakumar(JK) : Today’s Option play
103773657 : Broadcom gonna get the deal
simonblp : The phrase 'made in USA' is Intel's greatest advantage. Under Trump's administration, it was poised to take advantage of opportunities.
151865059 : Yes direct the way bro