Intel’s stock dropped over 10% to $47.29, causing concern among retail traders. This decline was anticipated by chart analysts due to Intel hitting a resistance level, with the earnings report serving as a catalyst for the pullback.
Technical traders are preparing to place buy orders at strategic points. Two potential buy targets have been identified: $44.00 and $42.00. The $44.00 level is a pivot point that could act as a floor, while $42.00 is critical due to its alignment with a trendline from August’s lows.
These points offer favourable conditions for day and swing trades. Traders must watch the $44.00 level for immediate opportunities but consider $42.00 for long-term positions. The $42.00 level is expected to attract significant market action. It is seen as a strong point for institutional entry, presenting optimal risk-reward scenarios for traders. The overall strategy focuses on buying during the current downturn, taking advantage of market fear and resetting conditions.
We remember the big flush in Intel after its earnings report this time last year, in January 2025. The stock gapped down over 10% below $50, causing widespread panic among many retail traders. That drop toward the $42 support level, however, proved to be the exact buying opportunity we were waiting for, setting up a profitable multi-week swing trade.
Today, the situation feels familiar as we approach another earnings report next week, with the stock trading near $58. Implied volatility is extremely high, with an IV Rank of 85, as the options market is pricing in a potential 9% move in either direction. This elevated premium is precisely what derivative traders look for when selling options.
Instead of buying the stock, we should be looking at the options market to sell put credit spreads below the current price. A solid strategy would be to sell the February $45 strike puts while buying the $42.50 strike puts for protection. This position allows us to collect a premium while defining our risk, profiting if Intel stays above those key support levels that held up so well last year.
For traders with a more bullish view, the best move is to wait for the post-earnings volatility crush. After the announcement, options will become significantly cheaper regardless of the direction the stock moves. If Intel does dip into the low $50s on the news, we can then purchase calls with a few months of duration at a much better price.
