Intel’s CEO, Lip-Bu Tan, recently met with President Trump to address concerns about his possible resignation due to his ties with China. Bloomberg reports that the Trump administration is looking into the idea of the U.S. acquiring a stake in Intel, which could signal a shift in strategy. As a result of this news, Intel’s stock price rose by $1.48, up 6.53%, bringing it to $23.67. The impact of this possible ownership on defense contractors is yet to be determined.

Market Reaction and Stock Performance

The market is reacting positively to the idea of a U.S. government stake in Intel. This is seen as a potential safeguard for the company. Intel’s stock has rallied, and the volume of call options for upcoming expirations is more than five times the daily average. This reaction indicates that traders are betting on government support to stabilize the stock price. The key point here is the surge in uncertainty, which leads to higher option premiums. We have noticed that Intel’s 30-day implied volatility jumped from around 35% to over 60% in just one trading session. This environment offers opportunities for strategies that profit from volatility itself, not just from the stock’s direction. For those who expect the stock to rise, buying call options is a straightforward way to capitalize on that upside, although these options are now more expensive. An alternative is selling cash-secured puts. This strategy allows us to collect a higher premium while setting a lower purchase price for the stock, making it more attractive if the stock pulls back.

Potential Outcomes and Market Strategies

The outcome of government discussions is uncertain, which means a significant price change in either direction is very likely in the coming weeks. A long straddle—buying both a call and a put with the same strike price and expiration—is a viable strategy to profit from this expected volatility. Though this strategy can be costly, it directly bets on the high volatility we’re currently experiencing. We should also recall the government actions during the 2008 financial crisis, which caused extreme volatility in affected stocks for years. This news follows a July report from the Commerce Department highlighting serious vulnerabilities in the domestic semiconductor supply chain, providing context for the administration’s actions. The major risk is that these talks could lead to no changes, which might drop the high volatility and reverse the stock’s gains. It’s important to also keep an eye on the effects on defense contractors and the wider tech sector. Any government involvement could prioritize national security contracts, potentially benefiting companies like Lockheed Martin and Raytheon, which have seen increased options activity this week. This could create a trading opportunity by going long on Intel and selected defense firms to take advantage of the theme of national industrial policy. Create your live VT Markets account and start trading now.

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