Buying INTC puts: hedge math and breakevens

A long put is the right to sell 100 shares at $90 until August 28, 2026. Max loss is the $800 premium; max profit is $8,200, reached only if INTC goes to zero.

Below $82 the position is in profit at expiry, gaining one-for-one with each dollar the stock falls. Above $90 it expires worthless — which is the good outcome if you own the shares.

Puts carry a structural headwind: skew. Downside strikes on INTC trade at higher implied vol than equivalent upside strikes because everybody wants the same protection at the same time. You are buying the expensive wing, always.

As a hedge on 100 shares, this put caps the loss below $90 at the cost of 8.9% of position value — an annualized drag of 119.9% if you run it continuously. That is the honest price of permanent protection, and it is why most people don't.

The modal outcome for a bought put is expiring worthless. INTC above $90 at August 28, 2026 costs the full $800, and stocks drift up more often than down.

Timing risk is worse than for calls: crashes are fast and rare, so a put's payoff is concentrated into a few days that may fall outside your 27-day window entirely.

Time is the cost you cannot hedge. A debit structure needs the move and needs it before expiry, and being early is indistinguishable from being wrong once the contract settles.

The most asymmetric name on this list for a debit buyer. A capped spread on a stock whose bull case is a re-rating gives away exactly the outcome you are paying for, which is one of the few genuine arguments on this site for owning the outright option instead.

INTC's Aug 28 strikes are $2 apart near the money (2.22% of spot). That is a coarse ladder: one rung is a large fraction of the implied move, so precision on the short strike is an illusion. 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. Owning upside on an inverted skew means paying the expensive side of the surface, which is worth knowing before you buy the call. 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. A directional structure whose profit zone begins inside that band is expressing a view the market has already priced.

The INTC-specific failure mode: Reading a low share price as low risk. The percentage moves here are semiconductor moves; the dollar amounts just make them easier to underestimate.