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Covered calls on Intel (INTC): the quality question comes first

Intel's calls pay more than a slow staple's. That is not a gift. It is the market telling you the stock could keep moving. Here is what that means for a covered call seller, with the loss worked out.

Options guide · 8-minute read · Updated 2026-10-26

What Intel is like for a call seller now

Intel (INTC) is a large chip maker that lost a big share of its market value over several years. It spent heavily on new factories while rivals took share, and the stock became a turnaround story. Check the latest reports before you treat that picture as current.

For a Covered call seller, that history shows up as:

• Higher Implied volatility than a staple. Premiums look generous. That is the market pricing in big moves, both ways.
• Earnings that move the stock. Quarterly reports have produced large gaps. Know the date before you pick an expiry.
• A dividend you can't count on. Intel cut its dividend in 2023 and suspended it in 2024. Check whether it has been restored before you build a plan around one.
• Very liquid options. Weekly expiries, tight spreads, deep Open interest.
• A lower share price than most big tech names, so 100 shares need less capital than, say, 100 shares of Microsoft.

None of this is a recommendation. Intel is here because people search for it, and because it is the clearest example of the question every fallen stock raises.

The quality question

Before any strike or expiry, ask one thing: would I buy 100 shares of this company today with no option attached?

A covered call does not protect the shares. The premium is a small cushion. If the answer is "I'd only own it for the premium," you have the trade backwards. The premium is small, the share position is the whole risk, and on a fallen stock the share position has already shown it can fall.

Things a careful seller checks on a turnaround name:

• Is the business still profitable, or spending more than it earns?
• Is the stock making higher lows, or still lower lows? On the chart, where was the last place price turned around, and did it hold?
• Is there a date, like earnings or a product launch, inside your expiry?

Our page on quality checks before wheeling a stock goes through the list.

Three months of calls on a stock that keeps falling (an illustration, not a trade idea)

The numbers are for a made-up stock, XYZ, built to behave like a fallen large cap. They are not Intel's prices.

You buy 100 shares of XYZ at $30 ($3,000). You sell a 30-day $33 call for $0.80 ($80). The stock drops after earnings. You keep selling calls, each one a little lower.

Three months of "collecting premium," and the account is down $810. The premiums, $190 in total, covered less than a fifth of the drop.

Now the other ending. Say in month 3 the stock bounces to $27 instead. Your $25 call is in the money. The shares are called away at $25.

You sold a strike below your cost in month 2 and month 3. The bounce you waited for turned into a forced sale at a loss. That trap has its own page: the strike below cost trap.

Why the bigger premium didn't help

The premium on a volatile stock is bigger because the expected move is bigger. In the example, the stock moved about $4 a month. The call paid under $1. The premium was priced for the move, and the move was larger than the premium every single month.

This is the pattern behind why high premium is a warning. A fat call premium on a fallen stock is not extra pay for the same risk. It is the same pay for extra risk.

What to do instead

• If you already own Intel and are underwater, decide first whether you'd keep the shares with no option at all. If no, selling calls below your cost only delays the decision and can lock in the loss. See I sold a call below my cost basis.
• If you don't own it, the fairer first step in the wheel strategy is to decide the price you'd pay for the company, and whether it is one you'd hold through another bad year. If yes, a cash-secured put at that price is the entry. If no, there is no trade.
• Either way, size it as 100 shares of a stock that has already shown it can halve. Not as a premium trade.

Account note: covered calls are allowed in most registered accounts (TFSA, RRSP, IRA), but a US-listed stock in a Canadian account has its own tax wrinkles on dividends, and options permissions differ by broker.

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