A Pullback to approximately 15.15/share during “after-hour” trading on 4/14/09 is quantitatively appealing in establishing a long position on Intel (INTC).
The close of 16.01 places INTC on a bullish stance, according to the following technical indicators:
A. Composite Indicator– Which is a Trend Spotter (TM)
B. Short term Indicators– The 10-8 Day Moving Average Hilo Channel, 20 Day Moving Average Versus Price, 20-50 Day MACD Oscillator, and 20 Day Bollinger Bands suggest a buy. The 20 Day Average Volume is 66859422.
C. Medium Term Indicators– The 50 Day Moving Average versus Price, 20-100 Day MACD Oscillator, and 50 Day Parabolic Time/Price suggest a buy. The 50-Day Average Volume 70653359.
D. Long Term Indicators– The 100 Day Moving Average versus Price, and 50-100 Day MACD Oscillator suggest a buy. 100-Day Average Volume - 68089414.
On 4/15/09, assuming the shares commence trading at 15.15, the May strike 15 calls would open the trade at approximately .76/contract. This would give the new shareholder .61/contract in intrinsic time value till option expiraton, assuming the calls are written. Moreover, the shareholder has a downside protection to 14.54/share which is the March 17 2009 pivatol (infliction) point. At 14.53/share, the May Strike 14 calls would probably trade between .97 to 1.00/contract, offering the accumulation of new shares a juicy .44 to .47/contract in intinsic time value and a downside protection to 13.56– which is a solid 5 month support level. At 13.56/share, the May Strike 13 would bid .88 to .90/contract giving the investor .32/contract in time value and a downside protection to 12.68.
The dollar-cost-average pyramid hedged with may calls stated above provide roughly a 72% downside protection against the underlying shares, but only 48% when hedged with put options with similar strikes.
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