Intel Plunges 3%, What's Behind the Sudden Selloff?

Summary
• Federal judge dismisses lawsuit over $32B stock plunge
• Earnings report looms amid $18.8B annual loss
• RSI at 65.5 signals neutral momentum, Bollinger Bands show 21.8–24.0 range

Intel’s stock has plunged 3% to $22.795, trading below its 200-day MA of $21.82 and testing key support levels. The selloff follows a mixed bag of news: a legal victory dismissed without precedent, a bleak earnings forecast, and a sector-wide AI chip arms race. With $60M in turnover, traders are scrambling to parse whether this is a technical breakdown or a fundamental reset in a struggling chipmaker’s turnaround.

Legal Victory Ignites Profit-Taking Amid Earnings Jitters
The dismissal of the class-action lawsuit—without allowing re-filing—initially stabilized Intel’s stock, but the broader narrative of a $18.8B annual loss and a $31.47 52W high far above current levels triggered profit-taking. The court’s ruling clarified that Intel’s 2023 foundry losses were not misreported, removing a potential overhang but failing to offset investor skepticism about CEO Tan’s cost-cutting strategy. With AI demand concentrated at rivals like AMD and TSMC, Intel’s 26% single-day plunge last August remains a psychological scar for the market.

Options & ETF Playbook: Navigating the 200-Day MA Breakdown
• RSI: 65.5 (neutral momentum)
• MACD: 0.488 (bullish), Signal Line: 0.518 (bearish), Histogram: -0.03 (divergence)
• 200-Day MA: $21.82 (below current price)
• Bollinger Bands: $21.8–24.0 (tightening range)
• Support/Resistance: 23.23–23.30 (30D), 20.17–20.35 (200D)

Intel’s technicals suggest a short-term bearish bias as the stock trades below its 200-day MA and faces key support at $21.80. The options market reflects this with elevated volatility (64.36–74.63%) and gamma-heavy puts at the 22.5 strike. Two high-conviction plays stand out:

• INTC20250801P22.5 (Put, $22.5, Aug 1)
- IV: 68.34% (mid-range)
- LVR: 26.73% (high leverage)
- Delta: -0.4387 (sensitive to price swings)
- Theta: -0.00627 (low time decay)
- Gamma: 0.1617 (high sensitivity to movement)
- Turnover: $177K (liquid)
- Why this contract: The 22.5 strike offers maximum gamma exposure to a 5% downside scenario. If INTC drops to $21.35 (5% below current price), the put’s payoff would be $1.15 per share. The low theta ensures minimal decay, while the high gamma amplifies gains in a sharp move.

• INTC20250801C23 (Call, $23, Aug 1)
- IV: 71.50% (high)
- LVR: 25.25% (moderate leverage)
- Delta: 0.4825 (balanced sensitivity)
- Theta: -0.0993 (moderate decay)
- Gamma: 0.1562 (high responsiveness)
- Turnover: $455K (high liquidity)
- Why this contract: The 23 call offers a balanced risk-reward profile. If INTC rallies to $24.43 (5% upside), the call’s payoff is $1.43 per share. The moderate theta and high gamma make it ideal for a bounce-trade setup.

Trading outlook: Aggressive short-sellers may target the 22.5 put for a 5% move, while bulls should wait for a rebound above $23.30 to test the 23 call. The 200-day MA at $21.82 could act as a critical floor—break below that, and the 21.5 put chain becomes a high-risk/high-reward play.

Backtest Intel Stock Performance
Intel (INTC) has historically shown a positive short-to-medium-term performance following a -3% intraday plunge. The backtest data reveals that:1. Frequency and Win Rates: Such events have occurred 626 times over the past five years, with a 3-day win rate of 51.76%, a 10-day win rate of 55.43%, and a 30-day win rate of 52.56%. This indicates that Intel tends to bounce back within a short period after a significant intraday decline.2. Returns: The average 3-day return following the event is 0.19%, with a maximum return of 0.52% on day 14. The 10-day return is slightly higher at 0.23%, with a maximum return of 1.24% on day 21. The 30-day return is nearly break-even at -0.04%, with a maximum return of 1.66% on day 30.3. Max Return Days: The maximum return following a -3% intraday plunge occurs later in the 10-day period, with the highest return day being day 21, which suggests that while Intel may rebound from such events, the pace of recovery slows down over the longer term.In conclusion, while a -3% intraday plunge in Intel's stock price presents a potential buying opportunity, the returns following such an event are generally modest, and the maximum return days occur later in the short-to-medium-term horizon. Investors should consider their risk tolerance and investment horizon before taking action on such events.

Short-Term Volatility Ahead: Watch the 200-Day MA
Intel’s selloff reflects a mix of legal clarity and fundamental doubts. While the 200-day MA at $21.82 offers a near-term support target, the broader sector’s focus on AI growth (AMD up 2.39%) suggests Intel’s path to profitability remains uncertain. Traders should prioritize the 22.5 put for a 5% downside bet and monitor the 23 call for a bounce. If the stock closes below $21.80, the 21.5 put chain could see a surge in gamma-driven activity. Act now: Position for a $22.5 pivot or wait for a $23.30 retest to define the next leg.