Schaeffer's Top Stock Picks for '25

IBM Earnings Reaction Sparks Heavy Options Trading

IBM options traders are betting on a quick bounce

Apr 18, 2018 at 10:45 AM
facebook X logo linkedin


IBM (NYSE:IBM) last night reported a first-quarter profit of $2.45 per share, excluding items, on $19.07 billion in revenue -- more than analysts were expecting. However, Big Blue said its adjusted gross margin dropped to 43.7% and it expects full-year adjusted earnings of at least $13.80, both below forecasts.

As a result, the shares were hit with price-target cuts at Barclays (to $188) and Independent Research (to $175), while Wedbush called the earnings "low quality," and said IBM is a "work in progress." At last check, the stock has plunged 6.4% to trade at $150.57 -- dragging the Dow into the red.

The shares are now trading below their year-to-date breakeven level, and their 200-day moving average -- both of which have worked as a magnet for IBM since the broader stock market correction took its toll in early February. Year-over-year, the Dow stock has given back 11.5%.

And as IBM stock sells off after earnings, options volume has exploded. Most recently, around 41,500 calls and 25,000 puts have changed hands -- nearly 11 times what's typically seen at this point in the day, and volume pacing in the 100th annual percentile.

Buy-to-open activity has been detected at the April 152.50 call, the most active option so far, signaling expectations for a quick end-of-week rebound. If this is the case, breakeven for the call buyers at this Friday's close is $153.23 (strike plus the volume-weighted average price of $0.73).

 
 

You have the chance to join one of Bernie's most exclusive programs, complete access at HUGE savings!

As we prepare for a new administration to take the reins in Washington, the near-term market landscape is rife with uncertainty.

The Federal Reserve has already hinted at the turbulence ahead, lowering its interest rate outlook for 2025.

Meanwhile, breakthroughs in artificial intelligence (AI), quantum computing, and other transformative sectors have unlocked incredible profit potential.

But these opportunities are fleeting, and timing is everything. That's where Quick-Hit Trader comes in.

Quick-Hit Trader is designed for precision and speed, getting you in and out of the market in a flash. While other investors scramble to navigate volatile conditions, you'll have access to expertly curated trades that leverage these rapid shifts to deliver explosive profits in short order.

This is your chance to capitalize on the fast-moving market like never before. Are you ready to make your move?

 

 

(function(doc, script) { var js, fjs = doc.getElementsByTagName(script)[0], frag = doc.createDocumentFragment(), add = function(url, id) { if (doc.getElementById(id)) {return;} js = doc.createElement(script); js.src = url; id && (js.id = id); frag.appendChild( js ); }; // Google+ button //add('https://apis.google.com/js/platform.js', async="defer"); // Facebook SDK add('//connect.facebook.net/en_US/all.js#xfbml=1&appId=772755279557744', 'facebook-jssdk'); // Twitter SDK //add('//platform.twitter.com/widgets.js', charset='utf-8'); fjs.parentNode.insertBefore(frag, fjs); }(document, 'script'));