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In recent weeks, bearish speculation has approached fever pitch on Hewlett-Packard Company (NYSE:HPQ). During the past 10 days, options traders on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 3.29 puts for every call on HPQ, with bearish options bought to open more than tripling their bullish counterparts. This ratio arrives in the 100th percentile of its annual range, revealing that traders have been buying puts over calls at an annual-high pace.
This negative sentiment is also reflected by the Dow component's elevated Schaeffer's put/call open interest ratio (SOIR). HPQ currently sports a SOIR of 1.17, indicating that puts outnumber calls among options set to expire within three months. This figure ranks higher than 92% of other such readings taken during the past year, as short-term speculators have rarely been more put-heavy on Hewlett-Packard shares.
It's not just options traders who are betting against HPQ, either. Only two analysts have deemed the stock worthy of a "buy" or better rating, compared to 15 "hold" recommendations and six "sell" or worse suggestions.
On the charts, HPQ has swallowed some steep losses lately. The stock is down about 15% for the month of April, even though it's still sitting on a respectable year-to-date gain of 42%, at $20.25.
Despite the remarkably weak price action this month, HPQ has recently been testing support in the $19.50 neighborhood, which has capably contained the equity's lows over the past week. In fact, Hewlett-Packard is on pace to notch a daily close above its 10-day moving average for the first time since April 1.
With pessimism toward the stock hovering near peak levels, a breakout by HPQ on the charts could spook some of the weaker bearish hands -- potentially triggering a fresh wave of buying pressure to aid in its recovery.