Intel is cutting more than 15,000 jobs, representing about 15% of its global workforce. This is part of a larger plan to reduce its workforce by 22%, bringing it down to around 75,000 employees. The company is also scaling back its manufacturing efforts. It has canceled plans to build new chip factories in Germany and Poland. Additionally, Intel will close an assembly site in Costa Rica and merge operations in Vietnam and Malaysia. The timeline for opening Intel’s factories in Ohio, originally set for 2025 and then pushed to 2030, is now unclear. Intel has warned that it might stop advanced chip manufacturing in the next four years. This decision hinges on whether it can attract enough external clients for its Intel Foundry business. CEO Lip-Bu Tan noted that the company made “unwise and excessive” investments in capacity, which has left its factory setup fragmented. This announcement signals a bearish outlook for the stock in the coming weeks. The deep job cuts, canceled factories, and potential exit from its core business pose significant risks. Traders should consider strategies that profit from a falling share price, specifically using put options. The current strategic uncertainty is increasing implied volatility, which has risen above 45% during recent earnings calls and major announcements. This spike makes options pricier but offers rewards to traders who can predict large price shifts. We recommend taking advantage of this high volatility, as it shows the market is expecting significant movement. The situation is more concerning when compared to rivals like Nvidia, which recently reported over 260% revenue growth year-over-year, largely due to its strong position in the AI sector. This contrast highlights a market shift that is putting Intel at a disadvantage. Tan’s acknowledgment of “unwise and excessive” investments further shows the company is struggling to keep up. This scenario echoes the challenging transitions of other tech giants, such as IBM in the 1990s, which took years of restructuring before establishing a stable business model. History suggests that any turnaround for Intel will be a long process with ups and downs. For traders, this means short-term rallies should be approached with caution, potentially creating opportunities for new bearish positions. Given the high option costs, we recommend traders consider using spreads to manage risk and reduce entry costs. For example, a bear put spread allows traders to profit from a moderate decline while limiting the initial premium spent. This method is a more capital-efficient way to express a bearish outlook in today’s high-volatility environment.

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