Intel Corp (INTC)

[Maui]

Elmer, wbmw, Sarmad, others

I would love to hear you poke holes in my theory!

I just quit Intel after working there for eternity. Currently I am loaded with INTC. I have money in my profit sharing that I plan to rollover to an IRA and invest in some stock.

I am beginning to find AMD attractive now.

I was looking at AMD jan 2010 7.5 covered calls. Writing CC would fetch me $3.40 at current price, which is over 40% in value and 66% (0.4/1-0.4) if I fully invest - about 28% annualized gain if the stock stays above 7.5 in Jan 2010. It has to end up below $4.50 for me a make a loss.

My logic being AMD can do a lot of things to not drop a whole lot more from current level - go back to where they came from (serve the mid to low end 15% market), do massive cost-cutting, provide value to specific customers, get their product line in shape (though this might take some time) or rely on Nehalam being a bust.

In the worst case, if AMD doesn't recover (and goes under), Intel would go up significantly from current level, which would more than offset my losses from AMD.

Do you see a scenerio where AMD goes down lot more from current level and Intel doesn't increase their EPS significantly from a weak AMD?

Thanks
Maui.