After Intel and the Trump administration reached a historic agreement a month ago, the U.S. government invested $8.9 billion in Intel common stock, the beleaguered chip maker seemingly became stabilized. INTC then saw a nearly 23% pop Thursday after news broke of Nvidia, the world’s leading chipmaker, investing $5 billion in Intel and committing to collaborate with the former chip champion. Despite Intel being up almost 50% year to date, I want to use options as I believe Intel will continue to find its footing. Intel shares on Thursday made their biggest one-day jump since 1987. Nvidia jumped up by more than 3%, galvanizing its $4 trillion market cap. A month after the Trump administration confirmed it had finagled a 10% stake in Intel, Nvidia said it would join forces to work on custom datacenters that remain at the heart of the AI revolution. The partnership comes just weeks after Intel found itself in trouble with the White House. President Donald Trump publicly blasted Intel CEO Lip-Bu Tan and suggested an immediate resignation, citing conflicts of interest from his investments in China. Trump quickly changed his opinion after meeting with Tan. Nvidia (NVDA) is betting big on Intel (INTC). The world’s most valuable chipmaker (current market cap of $4.3 trillion) is investing $5 billion for nearly 4% of Intel and is seeking to partner on new PC and data center chips. Since the U.S. government, and Nvidia CEO Jensen Huang himself, have synthetically created the “Intel Put,” I think selling a put to finance an upside call to allow for further upside retracement is a logical approach. Intel is an essential name to the U.S. economy and now has a chance to reclaim some glory. The trade (risk reversal) Sold the Nov. 21 $30 INTC Put for $2.55 Bought the Nov. 21 $32 INTC Call for $2.15 I established this trade as a slight credit spread, collecting $0.40 or roughly $40 per one lot INTC was oscillating around $30 at the time of this trade An investor must be prepared to own INTC at $29.60 in the event Intel turns lower in the next two months. DISCLOSURES: Kilburg is long INTC and sold the spread above. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
Intel could be finding its footing after big Nvidia deal. An options trade to ride out more gains
