As Intel (NASDAQ: INTC) released its Q2 earnings after markets closed on August 1, options traders anticipated a weaker-than-expected report. Their foresight was rewarded when Intel’s stock price dropped significantly, leading to substantial profits, with one trader earning millions.
The trader purchased $27.5 put options set to expire on August 1, strategically positioning themselves to benefit from a decline in Intel’s stock price.
In a swift move, the trader exited this position on August 2, locking in a staggering return of 1,029% within just 24 hours. This gain turned an initial investment of $622,000 into a sum exceeding $7,712,800.
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The trade proved lucrative as the trader was betting on a weaker-than-expected Q2 earnings report, which would, in turn, support the bearish sentiment and increase the selling volume and short positions, thus exerting downward pressure on the INTC share price.
There were multiple bearish bets against INTC stock on August 1
This trade was part of a broader market trend, as many investors holding bearish positions on Intel also chose to either roll over or exit their positions on August 2.
This collective activity was likely influenced by the prevailing bearish sentiment among traders on August 1, which may have been driven by a combination of factors, including a weak earnings report, Intel’s plan to reduce its global workforce, and lower salary offers than its rivals in the artificial intelligence (AI) sector.
Intel stock price plummeted after earnings
After posting a miss on its earnings, INTC stock lost 32.15% since, making up most of the past month’s losses of 42.85%
More recent trading sessions show 2.28% losses in the previous five, with the latest trading day setting the INTC stock price at $19.71 after a 3.81% retreat.
Intel’s stock price continued to decrease in the following trading sessions due to negative news surrounding the company, which indicated a significant reduction of expenses and a high possibility of diminished returns in the upcoming quarters, supported by the Wall Street analysts’ price targets downgrades, allowing bearish traders to maximize their profits.
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