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Hewlett-Packard Company (HPQ) Traders Eye Short-Term Struggles

Hewlett-Packard Company calls were popular leading into today's session

by 3/12/2014 11:36 AM
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Calls have been preferred over puts on Hewlett-Packard Company (NYSE:HPQ) lately, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the equity has racked up a 10-day call/put volume ratio of 3.98 on these exchanges, which ranks higher than all other comparable readings taken in the last 12 months. In other words, calls have been bought to open over puts at an annual-high clip in recent weeks.

In today's session, though, option players have taken a decidedly different route, and at last check, puts were trading at a 71% mark-up to the typical intraday pace, and outstripping calls by a 3-to-1 margin. The most active strike thus far is the April 26 put, where 7,961 contracts have changed hands. All of these puts have gone off at the ask price, implied volatility has ticked higher, and volume exceeds current levels of open interest, pointing to buy-to-open activity.

On the charts, Hewlett-Packard hasn't traded south of $26 since Nov. 27. In fact, since hitting its intraday low of $25.09 that day, the equity has tacked on more than 18% to linger near $29.67. Additionally, HPQ has found technical support from its rising 50-day moving average -- a trendline that served as a springboard during the security's last two pullbacks.

In light of this, today's activity at the out-of-the-money strike could be indicative of Hewlett-Packard Company (NYSE:HPQ) shareholders initiating protective puts to guard against any near-term downside. As it turns out, the equity is down 0.8% today in early trading. HPQ shareholders will gain insight into the company's health at the tech firm's annual meeting, scheduled for next Wednesday.


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