Today’s tickers: INTC, SMH, AIG & EEM

INTC-Shares of the tech-sector bellwether jumped more than 4.5% to $20.35 this morning after projecting higher sales estimates for the quarter. The world’s largest chip maker also increased the gross-margin forecast for the period, and expects margin will be between 53 and 55 percent. Option bulls reacted to the news by exchanging call options more than 3 times to every put traded on the stock. Optimism for continued upward movement in INTC was reflected at the near-term September 21 strike price where more than 3,500 calls were purchased for an average premium of 26 cents apiece. Bullish sentiment spread to the October contract where nearly 10,000 calls were coveted at the October 22 strike for about 36 cents each. Traders holding these contracts will begin to accumulate profits if shares of Intel rally through the breakeven point at $22.36 by expiration. Option implied volatility on the stock rose up from 28% to a high of 31% during the session, but has since come off slightly to stand at the current reading of 30%. – Intel Corp. –

SMH-Heavy put activity was observed on the Semiconductors exchange-traded fund today perhaps as investors strive to lock in gains from the more than 2% rise in the underlying to $25.73. Chip makers and computer-industry companies alike rose during the session on optimism that the demand for PCs and technology-related hardware may be stabilizing. It appears that one trader, who is likely long the stock, sold 16,000 puts at the now out-of-the-money September 25 strike price for 37 cents each in order to extend downside protection to a higher strike in October. He purchased 16,000 puts at the in-the-money October 26 strike for an average premium of 1.26 per contract. The net cost of rolling the position higher amounts to approximately 89 cents and protects the trader in case the SMH declines beneath the breakeven price of $25.11 by expiration. Plain-vanilla put buying was seen at the 24 strike price in both the October and November contracts. Purchases may have been motivated by players long the stock and looking for cheaper protection today, or by contrarian investors hoping to profit if the fund declines over the next several months. – Semiconductor HOLDRS Trust –

AIG– The wings of a butterfly spread unfurled across the October contract this morning as one option trader appears to be loading up on protective put…
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