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Option Brief: Hewlett-Packard Company (NYSE:HPQ) is trading solidly higher this afternoon, up 3.7% at $30.55. Earlier, Barclays upgraded the shares to "overweight" from "equal weight," saying the company stands to benefit from Lenovo Group Ltd's $2.3 billion acquisition of International Business Machines Corp.'s (NYSE:IBM) low-end server business. Amid this positive price action, calls are trading at three times the typical intraday pace, and are outpacing puts by a nearly 4-to-1 margin.
The most sought-after position is HPQ's March 30.50 call, where 18,553 contracts have changed hands. The majority of these contracts crossed the tape in a massive sweep of 10,100 -- at the ask price of $0.24, suggesting they were bought. With only 366 positions currently open here, it seems safe to assume that a new batch of bullish bets is being initiated. All other factors being equal, breakeven at this Friday's close -- when front-month options expire -- is $30.74 (strike plus the premium paid). This level sits in territory HPQ has not charted since August 2011.
However, annual highs are not out of the question for HPQ, considering the stock tagged a two-year peak of $30.71 on Feb. 21. Meanwhile, a brief pullback from this notable milestone was quickly contained by the equity's 50-day moving average -- and a bounce higher from this supportive trendline helped HPQ reclaim the round-number $30 mark.
Looking ahead, Hewlett-Packard Company's (NYSE:HPQ) annual shareholders meeting is on tomorrow's docket. The scheduled event is slated to kick off at 5:00 p.m. ET.