Intel (NASDAQ: INTC) recently got the “Barron’s bump,” with the influential publication calling for 30% upside over the next two years as the company’s mobile chip division continues to catch up with competitors.

Yet, Barron’s may have underestimated the speed at which this rally could take place, as Intel is at the forefront of what could be the next great technological revolution. And I think traders can leverage this into 76% gains in the next few months.

No one would deny that Intel was late to the mobile device party, i.e., tablets and smartphones. It largely focused on “old tech,” making chips for PCs while companies like Qualcomm (NASDAQ: QCOM) and ARM Holdings (NYSE: ARM) rushed into the mobile processor space. 

Intel’s management has acknowledged their mistakes and has vowed to capture market share with aggressive pricing, superior chip performance and integration. To that end, the company recently combined its PC and mobile units to increase efficiency. 

#-ad_banner-#The transformation is starting to pay off. Midway through this year, the company had 4% to 5% of the global tablet market. If it meets estimates to ship 40 million tablet chips this year, it will have roughly 15% of the pie.

Chairman Andy Bryant told The Wall Street Journal, “We were in denial on tablets. It put us in a hole.” But it doesn’t look like the company plans to make the same mistake when it comes to the next big thing: wearables.

Wearable technology is still in its infancy, but this budding sector looks like it’s about to undergo a huge growth spurt. The wearable device market is estimated to grow from $5.2 billion this year to $12.6 billion in 2018, according to Statista. That’s a compound annual growth rate (CAGR) of 25%.

Wearables include fitness bands, watches, glasses, shoes, clothing and even high-fashion jewelry. Intel is positioning itself to be at the center of this emerging trend and investing in the space from the inside.

For example, the company collaborated with Opening Ceremony to create a smart fashion bracelet called MICA, which stands for My Intelligent Communications Accessory. It features an 18K gold coating, a curved sapphire glass touchscreen display and wireless capabilities that allow the wearer to check email, view messages, set reminders, etc. The MICA, which is available for pre-order at Barney’s, has a $495 price tag.

While items like MICA show the diverse potential of wearables, it’s the mass appeal products from the likes of Apple (NASDA: AAPL) and Google (NASDAQ: GOOG) that will spur consumer adoption.

The Apple Watch is set to launch in the first quarter of 2015, and Google is gearing up to release its next generation of Google Glass later in the year. According to a Wall Street Journal source, Intel was selected to supply the processor for the new iteration of Glass, replacing Texas Instruments (NASDAQ: TXN).

Both devices are highly anticipated pieces of technology that could do for wearables what the iPhone did for the smartphone. Yet, they are merely the first step in the evolution of what some are calling the “age of the digital citizen,” where we are plugged in at all times. 

The bottom line is that the wearables market is going to be a major sales catalyst for the industry as a whole, but investors have yet to realize the true potential for all of the major players. I believe that realization will start with the release of the Apple Watch early next year.

Even though Intel’s chip won’t be inside the device, it will be a key turning point for the wearables market. And Intel’s restructuring, high-quality technology and commitment to mobile should allow it to capture market share in the space. 

INTC is trading at just 15.6 times Zacks consensus estimate for next year’s earnings of $2.40 per share, and my analysis puts the number at $2.45, at least. I think this valuation will look like a bargain as wearables’ potential impact on Intel’s bottom line comes into focus.

As a conservative estimate, INTC should at least trade in line with the forward P/E ratio of the S&P 500 of 17.25. Using that and my minimum $2.45 EPS estimate, we come up with a price target near $42.25, which is about 13% above current prices.

That’s less than half of the 30% upside Barron’s called for, and we can leverage that move into 76% profits in just a few months with a call option strategy.

INTC Call Option Trade

Today, I am interested in buying INTC April 33 Calls for a limit price of $5.25

Risk graph courtesy of tradeMONSTER.

This call option has a delta of 81, which means it will move roughly $0.81 for every dollar that INTC moves, but it costs a fraction of the price of the stock.

The trade breaks even at $38.25 ($33 strike price plus $5.25 options premium), which is 2% above current prices.

If INTC hits my $42.25 target, the call options will be worth at least $9.25. Once you enter the trade, place a good ’til cancelled (GTC) order to sell your calls at that price.

Recommended Trade Setup:

— Buy INTC April 33 Calls at $5.25 or less 
— Set stop-loss at $2
— Set price target at $9.25 for a potential 76% gain in 4.5 months 

Note: There’s another call option strategy that lets you earn $1,200 or more each month from the stocks you already own — by “renting” them out to other investors. To learn about this easy process, click here.

This article originally appeared on ProfitableTrading.com: New Tech Revolution Could Land You 76% Profits in ‘Old Tech’ Stock​