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Most Active Options Update: Hewlett-Packard Company (HPQ)

How one HPQ speculator readjusted her bearish bet

by 12/17/2013 3:05 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is Hewlett-Packard Company (NYSE:HPQ).


Hewlett-Packard Company is trading higher today, as an upgrade and price-target hike from J.P. Morgan Securities trumps reports of a Chromebook 11 charger recall. The upward momentum has done little to stifle put players' presence in HPQ's options pits, with the contracts trading at more than three times the average intraday pace. By the numbers, around 60,000 puts have changed hands thus far, compared to around 23,000 calls.

The vast majority of the put volume went off in four symmetrical blocks of 12,852 contracts apiece at HPQ's December 28 strike and February 2014 29 strike. The former changed hands near the bid price for $0.46 per contract, while the latter went off at the ask price of $2.38 each. The pricing of the trades suggests that one speculator may have rolled some of these puts up to a higher strike and out to a later date, as front-month options expiration approaches.

With HPQ lingering near $27.51, both puts are in the money. However, based on today's ask price for the February 2014 29-strike put, breakeven for this further-dated contract is $26.62 (strike less premium paid). Considering Hewlett-Packard Company (NYSE:HPQ) hasn't traded north of $29 since February 2012, delta for the put sits at negative 0.60, or 60%, suggesting a 3-in-5 chance the position will be in the money at expiration.


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