Intel Corp (INTC) stock broke above the 50-day moving average on Monday and is showing positive accumulation on the breakout.

One bad thing about INTC stock is that it currently doesn't pay a dividend.

But what if we could use options to manufacture our own dividend?

Does INTC Pay a Dividend?

Let's say I have $4,500 to invest into INTC stock, I could simply buy 100 shares and hope the stock rises.

But, if I want a more conservative play, I could sell a March 19, 2027 put with a strike price of $45 and set aside the $4,500 in case I am assigned on the short put.

That $45-strike put generates around $885 in option premium in around twelve months.

So, my $4,500 investment into INTC is giving me a 23.9% annualized "dividend".

Risks of the Trade:

Much like owning INTC shares, if the stock drops, I'm going to lose money in the short-term.

If INTC is below $45 in March next year, then I will be forced to buy 100 shares at $45.

The breakeven price is equal to the strike price less the premium received, which in this case would be $36.15, which is a 22.72% discount on the current stock price. 

So if INTC is below $36.15, at expiration the trade loses money. 

But, if INTC stays above $45 then I achieve a 24% per annum return when the put expires worthless.

Cash secured puts are a bullish strategy but are considered slightly less bullish than owning INTC stock because the potential gains are limited to the premium received.

The second risk with the trade is that if INTC stock goes on a huge rally, we miss out on any upside. The most we can make is the $885 from the option premium.

Greeks and Equivalent Exposure Level

The $45-strike put currently has a delta of 34, so selling this put gives an exposure roughly equivalent to owning 34 shares of INTC stock, although this will change as the stock moves up and down.

It also means the put has a roughly 66% chance of expiring worthless.

One method which can help cut the risk is to turn the trade into a spread and buy a $35-strike put. This turns the trade into a bull put spread and cuts the risk from $4,500 to around $1,000.

There are lots of interesting scenarios you can create with options.

Company Details

Intel Corporation, one of the world's largest semiconductor company and primary supplier of microprocessors and chipsets, is gradually moving into data-centric businesses such as AI and autonomous driving.

Intel is a dominant player for microprocessors in both consumer and enterprise markets.

Data Center Group, Internet of Things Group, Mobileye, Non-Volatile memory solutions group and Programmable solutions Group and All Other business units form the crux of Intel's data-centric business model.

DCG segment deals with servers, workstations and other products for cloud, enterprise, and communication infrastructure market. IOTG offers high-performance compute solutions and embedded applications.

PSG segment offers programmable semiconductors, primarily FPGAs and structured ASICs.

Mobileye is engaged in developing computer vision and machine learning-based sensing, data analysis, localization, mapping, and driving policy technology for ADAS and autonomous driving.

Implied volatility is currently 62.62% compared to a twelve month low of 37.87% and a twelve month high of 94.69%.

Of the 45 analysts covering INTC, 5 have a Strong Buy rating, 1 has a Moderate Buy rating, 34 have a Hold rating, 1 has a Moderate Sell rating and 4 has a Strong Sell rating.

Please remember that options are risky, and investors can lose 100% of their investment. This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.

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