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Back to Morning Trade Live, let's focus on Intel's one-year chart: the stock is down 28% from its all-time high in late June, but it's still up over 300% year-to-date. Intel is in the news this morning along with SK Hynix, so that's the main topic of morning trading. Molly Kagan joins us with the details.
I wonder if the talks between the two companies will be confirmed, but what do we know at this time, Molly? We know little. At least, there was a comment from SK Hynix in response to this Reuters report. Let's first go over what the report says, and then move on to the reaction and potential consequences.
We see both companies' stocks rising on expectations that this will become a reality, but Reuters reports that SK Hynix is in talks with Intel about possibly manufacturing chips in the US. This would be the first time a South Korean company has manufactured chips on U.S. soil , so it could potentially be a very significant deal.
They describe several possible scenarios for how this relationship might work. One of them: SK Hynix may lease part of Intel's long-planned chip manufacturing plant in Ohio. Another potential scenario involves forming a joint venture with Intel and other large cloud companies, which are also looking to secure a supply of memory chips.
But SK Hynix still issued a statement. Intel did not provide any comment after this report appeared. They stated, and I quote: “SK Hynix is exploring various options to strengthen its global competitiveness , but no specific plans or agreements have been finalized at this time.” No decisions were made regarding the two scenarios mentioned in the article .
"We would like to clarify that nothing has been finalized regarding cooperation with any specific companies mentioned in the article or regarding the production of memory chips in the United States." So, they're not confirming that it's Intel, but they're definitely not denying it in their statement, Sam.
If the deal were to go through, it would be a big win for Intel. They are looking for more customers for their foundry business, which is a big part of Intel CEO Lip-Bu Tan's turnaround strategy . It could also help government efforts to move more semiconductor manufacturing to America through a process of reshoring or onshoring.
One potential risk to watch out for in this potential deal: If the talks lead to anything concrete, the agreement between Intel and SK Hynix for memory production could face resistance from the South Korean government, as these technologies are considered sensitive . This is another thing that Reuters reported, citing multiple sources, that could be a potential problem.
But today we see both companies growing, Sam. Intel shares rose about 4 and 1/3 percent. We also see that Nvidia rose by more than a percent during the session . Yes, and Micron is also trading higher. I mean, if these preliminary talks are confirmed, it begs the question of what that means as a competitive threat to this company, which is obviously considered the top choice on American soil for memory.
But yes, an interesting development . Thank you very much, Molly, for the details. We also have a statement from SK Hynix. So let's trade Intel stock now with Mike Shaw, Director of Trading Education at Possible Trading Academy. Good morning, Mike. How would you approach the Intel deal example? So, well, up until today, the expected volatility has been very low.
And that's why I want to play on this . And it's still relatively low, not as low as it was because of the movement that we've been seeing. So the two trading options in such a situation are either a call- calendar spread or a call-diagonal spread. I want to take advantage of this low expected volatility.
And, as I said, it's still relatively low. So, I'm looking at the 108 calendar spread, and hopefully I want to enter it if we hit 102.88 or higher. I want to see it. We broke through that level this morning, but are now below it again. But if we do, I want to buy it at a price of $ 1.50 to $1.75. And that should give me at least a 1.5 to 1, if not 2 to 1 profit.
Okay, a good look at Intel, which, as we said, has retreated from its summer highs but is still holding steady in triple digits since the start of the year. Mike, your thoughts on the broader market ahead of a pretty big day? Yeah, well, thanks for putting me in an awkward position. The way I understand it is that anyone who doesn't think an interest rate hike is inevitable isn't looking at the data or the federal funds rate.
So this is essentially a given. I think if they don't raise rates, the market will react, "You're obviously not looking at the data." And the market will go down. If they raise the stakes, it will be mostly understandable. We can see the expected volatility there drop a little bit . But if Warsh comes out and talks about starting a regime of future rate hikes , the market will have a hard time.
And if he says, " Look, we've done what we thought was necessary, and now let's wait and see." I think the market will go up after this . Okay, worth watching. As always, I really appreciate your thoughts and perspective on the situation. Mike Shaw, Director of Trading Education, Prospa Trading Academy.
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