Intel (INTC, $26.20, up $0.82) reported earnings after the close yesterday and they came in better-than-expected, for the most part. The company announced a quarterly profit of $2.83 billion, or 54 cents a share, versus $2.95 billion, or 54 cents a share, in the year ago period. Sales were up 4% to $13.5 billion. Wall Street analysts were looking for 52 cents a share on revenue of $13.6 billion.
For the current quarter, Intel said sales will be $14.3 billion, plus or minus $500 million. The suit-and-ties have a forecast of $14.6 billion so Intel kept them on their toes. Gross margins are expected to come in at 63% while analysts had penciled-in 64%.
We profiled a straddle and strangle option trade for INTC in our video for our trading course, How to Trade Options on Momentum Stocks, on Sunday night. We talked about how Intel has averaged a 3 cents beat over the past 4 quarters but we weren’t expecting a huge move to the upside for Intel as many companies are blaming Europe for sales misses and lowered forecasts but we knew there could be a pop.
We also suggested if they missed estimates shares could tank 5%-10%.
The August options trades we profiled were listed on our Watch List Tuesday morning but we stayed on the sidelines as we are currently wrapping up our July trades. We wanted to show how these strategies can be used in choppy and volatile markets because our next batch of NEW TRADES may be strangle or straddle option trades as we continue to wait for a market breakout or breakdown.
With the indexes moving 2% intraday, we may deploy some of these types of trades in the upcoming months, especially if we continue to remain range bound. Remember, we still expect even larger price swings in the indexes over the coming months so don’t be nervous in using them if they become official recommendations.
International Business Machines (IBM, $187.04, up $3.39) will report their numbers after the close today so the blue-chips could be setting up for a big move on Thursday as the stock is a huge Dow component.
As we head to press, the Dow is up 105 points to 12,910 while the S&P is higher by 10 points to 1,374. The Nasdaq is showing a 38 point pop and is at 2,947.
We have a few more thoughts and a chart inside our Members Area for what tomorrow’s action could look like so make sure you check the artwork.