Put Traders Bombard IBM Stock Before Earnings

The shares of blue-chip IBM (NYSE:IBM) are down 2.4% this afternoon to trade at $126.30, simply ahead of the business’s fourth-quarter profits report — due out after today’s close. IBM stock holds an 11.8% lead over the last 12 months, however has actually currently shed 5.2% in 2022. IBM is seeing assistance at the previously resistant 320-day trendline, which put pressure on the shares for much of completion of 2021. Pacing for its 6th regular monthly loss in 7, the equity remains in desperate requirement of a favorable post-earnings swing.

IBM Chart Jan 24

IBM Chart Jan 24

That might not remain in the cards, nevertheless, as IBM stock has a history of moving lower after profits. Throughout the previous 2 years, IBM dipped following quarterly reports 5 times, balancing a 4.7% relocation, no matter instructions. This time around, the alternatives market is pricing in a higher-than-usual, 12.7% swing for Tuesday’s trading.

Put activity is increase ahead of the occasion too. At the midway mark, more than 31,000 puts have actually exchanged hands, which is quadruple the quantity generally see at this moment and almost double the quantity of calls traded. New positions are being opened at the most popular agreement, the weekly 1/28 100-strike put, showing these traders see more drawback for the stock by the time the agreement ends at the end of the week.

A more comprehensive appearance reveals puts have actually been a preferred amongst alternatives traders. This is per IBM stock’s 10-day put/call volume ratio of at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the lofty 94th yearly percentile, showing puts have actually been acquired over calls at a faster-than-usual clip of late.

Jobber Wiki author Frank Long contributed to this report.