This strategy allows you to profit if Intel stays below a certain price while strictly defining your risk.
It is a good strategy if you believe that Intel's recent rally has peaked or will move sideways.
Set Up: Sell a Call Option: Pick a strike price just above where you think Intel will struggle to rise eg USD50. This is the Short Call & you collect a premium for it.
Buy a Call Option : Pick a higher strike price eg USD 55. This is the Long Call which acts as insurance to cap your losses if Intel unexpectedly spikes.
Risk: If Intel suddenly spikes eg.postive news about Intel's 18A manufacturing node, this could lead to maximum loss.
Most traders recommend 50 to 80% of its maximum profit to avoid late stage volatility.
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