(B)(N) INTC Intel Corporation

Drama. The Intel Corporation is the “rainmaker” for the Microsoft Corporation and the Worldwide Internet, and has enabled a whole new universe, so to speak, with hundreds of its inventions, such as the awesome Dual Core™ i5 processor and 8 gigabytes of super-fast dynamic memory that “powers” these Posts from our desk at The RiskWerk Company to you whether you are in your office, at home, or on the streetcar, using, by the way, the rather impressive Windows™ 8 with “Intel™ Inside™”. Some analysts think that its best days are over (Reuters, April 14, 2013, Analysis: As PC era fades, good times may be over at Intel), as they once said of Mark Twain, and others are concerned that Intel might have to produce less in the next quarter, alas, by its own prudent forecast (Reuters, April 17, 2013, Intel’s foresees second-quarter sales decline as PC market shrinks), and, so, the stock price has been driven down from $28 a year ago to $22 today and it is trading below the Risk Price (SF) (please see Exhibit 1 below).

Because of that, we can’t include it in the Perpetual Bond™ at the present time (the Red Line Stock Price (SP) needs to be above the Black Line Risk Price (SF), not below it) and the last time that we held it was in 2011 at $23 through most of 2012, selling the last of our interest at $26 in July.

But we are grateful, not greedy, and don’t need to make up a story today that would please our editors. Instead, we calculate that our estimate of the downside risk due to the stock price volatility is minus ($2.50), so it might still trade at a lower price, but, then, we could also buy it for $22 today and also buy the July put at $22 for a rather expensive $1.09, but partially offset the cost of that by selling or shorting the July call at $24 for a rather cheap $0.24 (signalling a seriously asymmetric market curdled by pessimism), so that for a net cost of $22 for the stock and $0.85 for the “collar” ($1.09 less $0.24), we could collect our expected dividends of $0.225 per share per quarter, of some $4.5 billion that Intel expects to pay out to its shareholders this year, for a current yield of 4%, and wait to see what happens next with a stock price that, for us, is guaranteed to be no less than $22 and no more than $24 for the next several months, notwithstanding that we might roll our options creatively as more real information becomes available.

Why didn’t they think of that? For more information on why, please see our recent Post, What’s A Girl To Do?, April 2013, and the references therein to investing with our heads up rather than down.

Exhibit 1: (B)(N) INTC Intel Corporation – Risk Price Chart

Intel Corporation is a semiconductor chip maker, which develops advanced integrated digital technology products, mainly integrated circuits, for industries such as computing and communications.

(Please Click on the Chart to make it larger if required.)

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond™
“Alpha-smart with 100% Capital Safety and 100% Liquidity”
Guaranteed
With No Fees and No Loads on Capital

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Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.