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It appears International Business Machines Corp. (NYSE:IBM - 189.45) options traders are expecting a strong start to 2013, as evidenced by today's affinity for short-term calls. In early afternoon action, the blue chip has already seen roughly 12,000 calls change hands -- double its average midday call volume. For comparison, fewer than 5,700 IBM puts have been exchanged thus far.
The out-of-the-money 195-strike calls have garnered the most attention, with roughly 2,600 contracts traded in the January 2013 series, and around 1,900 1/4 weekly calls exchanged. The majority of the calls crossed at the ask price, and implied volatility was last seen higher at both strikes, hinting at buy-to-open activity.
By purchasing the calls to open, the buyers are expecting IBM to surmount the $195 level relatively soon. Specifically, the January-dated calls crossed at a volume-weighted average price (VWAP) of $1.13, indicating the buyers will reap a reward if IBM topples the $196.13 level (strike plus VWAP) within the next few weeks. Meanwhile, the VWAP of the soon-to-expire weekly calls is $0.31, suggesting the buyers will profit if IBM reclaims the $195.31 level by Friday's closing bell.
From a broader sentiment standpoint, today's appetite for near-term calls runs counter to the trend. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.35 indicates that puts outnumber calls among options expiring within three months. Even more telling, perhaps, this ratio sits just 8 percentage points from a 52-week peak, suggesting short-term options players have rarely been more put-skewed during the past year.
At last look, the shares of IBM have surrendered 0.2% to explore the $189.45 level. The security is flirting with a 3% gain for the year, but is in danger of ending the month beneath its 20-month moving average for the first time since June 2009.
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