8:00AM

Intel (INTC, $20.91, up $0.22) meet Wall Street’s average expectations after the bell on Tuesday by announcing 1Q earnings of 25 cents a share. The company warned in early March that it wouldn’t match estimates because its profits were going to come in slightly below expectations. Analysts then lowered their sales and earnings estimates for the quarter.

The stock moved higher last night in after-hours trading when Intel also reported that it had record sales for the quarter of $9.67 billion which were slightly higher than estimates of $9.63 billion. In after-hours trading the stock was up 8%, or $1.69, to $22.56 at 6PM. However, by 8PM, the stock was down $0.22 to $20.69.

As you can see, after-hour trading (from 4pm to 8pm) can be more volatile and less liquid than regular trading because there are no brokers or market makers. Everything is done using electronic communications networks, or ECNs. For those of you unfamiliar with “after-hour” trading, it is simply the trading of stocks after the market closes. As you know, traditional or regular stock trading takes place from 9:30am to 4pm EST.

Of course, this does not affect the stock’s closing price for the day and the next day gains or losses are quoted from the previous day closing price. This is why I said it would be difficult to figure out what direction the market will take Intel after they reported earnings. This is why it is also risky to buy options around earnings announcements.

Rick Rouse
Rick@OptionsMentoring.com