Intel’s shares increased by over 7% on Thursday. This rise followed a Bloomberg report indicating that the US government might invest in the company. The possible investment aims to help build Intel’s chip complex in Ohio. This project, announced in 2022 with an initial $20 billion investment, could eventually total $100 billion. The project has faced delays as Intel works on turning its business around. Intel did not comment on Bloomberg’s report. The news about a potential government stake has already led to a big jump in the stock price today. We are seeing a rise in implied volatility for Intel options in the coming weeks, making both puts and calls pricier. This reflects the market’s anticipation of various outcomes if the investment happens. For those expecting more good news, buying call options is a direct way to bet on stock price increases. However, because of the current high volatility, using vertical call spreads might help lower upfront costs and protect against a price drop if the report turns out to be untrue. A similar situation happened in 2023 when early news about CHIPS Act grants led to volatility spikes that later settled down. It’s important to remember that this equity stake is not confirmed yet, and the Ohio project has seen delays since its 2022 announcement. Traders who think the 7% jump is an overreaction might consider selling call credit spreads, betting that the stock won’t rise much in the short term. This strategy benefits from a stable stock price and a potential drop in implied volatility if no official announcement comes. This news is significant because the Commerce Department’s rollout of CHIPS Act grants has been slower than expected, with only about $40 billion of the original $52.7 billion awarded as of last month. With competitors like NVIDIA rising over 60% this year due to AI demand, a direct government investment could be a major boost for Intel’s recovery. Therefore, any official updates in the coming weeks may lead to another sharp price movement, making longer-dated options worth considering.

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