Zeev's Turnips Patch-No Politics (ZEEV)

[Joe Stocks]

Chip maker Intel (Nasdaq: INTC) had a rough day yesterday after Morgan Stanley cut its views on the semiconductor sector, along with three other tech groups. However, options players remain optimistic, as open interest at its December 20 call jumped from 70,656 to 79,826 contracts. In addition, the January 2003 22.50 call added nearly 23,000 contracts in Wednesday's trading to bring its open interest up to 83,648 contracts. Both options saw several large blocks change hands throughout the day. The security's SOIR checks in at a low 0.34, as calls are roughly three times that of puts in the front three months of options. This reading is lower than 92 percent of those taken over the past 52 weeks. While the number of INTC shares did increase by 10 percent over the most recent reporting period, all short positions can be covered in less than a day of trading. Wall Street seems hesitant to back the shares, as 13 analysts rate it a "buy," 12 rate it a "hold," and two rate it a "strong sell." After climbing for more than a month on support from its 10- day and 20-day moving averages, the stock has pulled back to test support at its 20-day trendline. INTC has not closed a day below both trendlines since October 17. Potential options-related resistance resides at the 20 strike, as this is the site peak front-month call open interest. Furthermore, the equity's 20-month moving average is also fast approaching this level. This long-term trendline has capped the shares on a monthly basis since March.