INTC bull put spread: credit, risk, strikes

You are still selling downside — just not all of it. The long $74 put cuts the tail off below that level, which is why this needs $581 of buying power instead of the $8,200 a cash-secured put would tie up.

Above $82 at August 28, 2026, both puts expire worthless and you keep the full $219. Below $74, you lose the maximum $581. Breakeven is $79.81.

Return on risk is 38% for 27 days — 510% annualized. That headline is the reason people prefer spreads to cash-secured puts, and the reason spreads blow up accounts: the same capital supports several times the notional risk.

The risk is leverage, not the structure. $581 per spread is small; the temptation to sell ten of them because the buying power allows it is how a 67%-win-rate trade produces a losing year.

Early assignment on the short leg leaves you long 100 shares plus a long put — a synthetic call, not a disaster, but a position you did not choose and one that requires $8,200 of cash on Monday.

Early assignment is an operational risk rather than a market one: it arrives on a weekend, converts a defined structure into a stock position, and requires cash you may have allocated elsewhere.

Cheap shares plus high implied vol is the combination that draws small accounts to Intel, and the yield tables look wonderful. What they encode is a genuinely bimodal outcome: the foundry strategy works or it does not, and the market is pricing both branches. Selling puts here is selling insurance on a binary event with no settlement date — sustainable at small size, ruinous at the size the buying power allows.

INTC's Aug 28 strikes are $2 apart near the money (2.22% of spot). Coarse enough that the strike you want frequently does not exist, and the nearest rung is a different trade. 18k contracts of open interest on Aug 28 is workable around the money and thin in the wings — width costs more here than the ladder suggests. 32 strikes on that expiry — 47% of the board — carry prints that agree with their own implied volatility and hold up across the ladder, and those are the strikes priced here. Liquid near the money with a fine ladder; the far wings carry stale prints more often than the volume suggests.

Skew is inverted: the 25-delta CALL implies 6.5% more vol than the put. That is the market pricing upside risk above downside risk — a squeeze, a takeover rumour, or a crowded short. Selling calls into an inverted skew pays better than usual and is riskier than usual for exactly the same reason. The term structure is backwardated — Aug 28 implies 3.1% MORE vol than the following month. That is the signature of a dated event inside the front month, and it is the strongest argument for picking the expiry that sits behind it.

At 85% ATM implied vol, the Aug 28 options are pricing a one-standard-deviation move of $20.95 over 27 days — roughly −23.2% to +23.2%, or $69.25 to $111.15. Everything the bull put spread above collects is rent on that range. If INTC routinely covers 23.2% in 27 days, the credit is fair compensation rather than edge.

What actually goes wrong here, as opposed to in general: Reading a low share price as low risk. The percentage moves here are semiconductor moves; the dollar amounts just make them easier to underestimate.