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Option Brief: Hewlett-Packard Company (NYSE:HPQ) isn't due to report quarterly earnings until late November, but it appears that one group of speculators is bearishly positioning themselves ahead of the event. The most active put today is the December 22 strike, which has seen 3,159 contracts change hands, the majority of which have crossed on the ask side. Implied volatility has ticked higher, and data from the International Securities Exchange (ISE) confirms some buy-to-open activity.
By purchasing the puts, traders expect Hewlett-Packard to slide to levels not seen since early October. Delta for the put is docked at negative 0.28, suggesting a 28% chance the position will be in the money at expiration. Should HPQ fail to breach the $22 mark by the close on Dec. 20, the most the traders stand to lose is the initial cash outlay. According to Trade-Alert, the volume-weighted average price for the puts is $0.68.
On the charts, HPQ has tacked on an impressive 68% in 2013, and was last seen lingering near $23.88. In light of this -- as well as the out-of-the-money status of the aforementioned puts -- a portion of the day's activity could represent shareholders protecting paper profits against an earnings-induced slide. In fact, the stock shed more than 14% on Aug. 22, after reporting a drop in its fiscal third-quarter revenue the night before.
Hewlett-Packard Company (NYSE:HPQ) is slated to unveil its fiscal fourth-quarter results after the closing bell on Tuesday, Nov. 26. Analysts have forecast a per-share profit of $1.00 -- a 16-cent decline from its year-ago results.