Intel in talks with SK Hynix to run U.S. memory production out of its Ohio fabs

Summary

The speakers discuss Intel's rally following reports of talks with SK Hynix about using Intel's Ohio fabs for U.S. memory production. They highlight gains in short-dated call options, increased volatility, and raised price targets, while suggesting that traders consider taking some profits.

• Intel reportedly held talks with SK Hynix about using its Ohio fabs for U.S. memory production.
• The speakers describe unusual buying in September 25 $114 calls expiring that Friday.
• They estimate the highlighted options trade had nearly tripled in value.
• Strong trading volumes and chart breakouts are cited as supportive factors.
• Higher implied volatility is making some options more expensive.
• Pete says he would consider taking part of the profitable position off the table.
• The speakers mention rising Intel price targets and a government investment reportedly made at $20 per share.

1. 0:00

   All right, let's talk about Intel.

2. 0:02

   Because we also had some unusual activity in Intel, Pete.

3. 0:06

   So, Intel uh rallying on reports uh that they have talks going on with the largest uh semiconductor company in uh Korea, which is SK Hynix. And they want to use Intel's Ohio fabs for US memory

4. 0:23

   production. Which is great. Uh that they might be using that to uh make their chips instead of making them over in uh uh South Korea and so forth. This would be fabulous. Well, the unusual activity showed up like this. It was 110 um

5. 0:42

   just last uh I guess that would be Thursday last week, Pete. It was 110.

6. 0:47

   Today, $10 higher. It's uh $12.28 higher than the close, I realize that, but $10 higher than where it was um Thursday of last week. Fabulous performance. By the way, if you scan that QR code on the screen, folks, it'll take you to where

7. 1:04

   you could subscribe to what Pete and I and all of our uh great uh editors put out every day. But uh this is uh an an option that expires this Friday, Pete.

8. 1:17

   >> Mhm.

9. 1:18

   >> I mean, so those right there, those uh 25th of September 114 calls, well, now they're what, seven bucks in the money?

10. 1:27

    >> Yeah.

11. 1:28

    >> probably trading like around eight eight and a half bucks or more at times. And uh that's pretty nice trade. It's nearly a triple for your money. What did you think of this move, Pete?

12. 1:39

    >> Yeah, pretty impressive. And and I'm not uh not shocked by the move at all, John.

13. 1:43

    I mean, there's been strong volumes.

14. 1:45

    It's There's breakouts going on. There's high volatility going on as well. I mean, these are very, very volatile markets. And when you get into some of these chip names, including Intel, Intel used to be a pretty passive, you know, sort of a stock and it's not anymore. It has become a lot more volatile and I and I I mean that in a good way. I mean, I

15. 2:04

    think it gives us great opportunities.

16. 2:06

    We talk about memory production and this and that and the utilization of things, but I think that this high volatility that's there, um it does cause that to have implied volatilities that are a little bit inflated, too, so that, you know, maybe some of those options cost a little more than they did. But, when you're as right as these guys were on this trade, John, uh

17. 2:25

    I I think you're willing to look past that because there's the chart, gives you a great example of just how fast this thing took off basically from the time those options traded until today.

18. 2:35

    And they still have the rest of the week, but I would Personally, I would say, "You know what? This thing's done pretty well so far. I think I'm going to take some of it off." Everybody's going to have their own thing. That's the discipline that you have, that I have, John. And, you know, one last thing is there's some price targets here as well that people are raising up for Intel.

19. 2:54

    So, there's a lot going on, I think, within Intel and this deal with Hynix and so forth. So, it could be very, very interesting into the future and Intel is alive.

20. 3:05

    It is alive.

21. 3:07

    >> Yeah. Oh, boy, is it ever. Um keep in mind, folks, that the president got us uh what? 8 million shares at uh uh or actually many more million shares than that. I think the investment was $8 billion, but uh at 20 bucks a share.

22. 3:25

    >> Not bad.

23. 3:40

    >> [music]

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