Avoid This Blue-Chip Stock in October

IBM premiums are a bargain at the moment

Deputy Editor
Oct 6, 2021 at 2:57 PM
facebook X logo linkedin


Last month proved to be a pivotal one for the S&P 500 Index (SPX), as "September seasonality" resulted in a monthly losses for the index, which also snapped a seven-month win streak -- its longest since 2017. That volatility tends to carry over to October, and while plenty of names usually buck this trendIBM (NYSE:IBM) has struggled in the past. The Dow member is on Schaeffer's Senior Quantitative Analyst Rocky White's list of 25 worst performing stocks for October, so now seems like a good time to dig into IBM stock's technical setup.

Worst Of October

According White's data, which features SPX stocks with the worst returns in October, IBM averaged a loss of 5.8% over the last 10 years, and finished higher just twice. That puts the security at the very top of the list, solidifying its position as the worst blue-chip component, historically, this month.

At last check, IBM is down 0.5% to trade at $142.43, once again facing pressure from the 100-day moving average. It has been a relatively unremarkable year for the security so far, as its June 10 rally to an annual high of $152.84 is still far off from pre-pandemic levels. Now sporting a 12.4% lead in 2021, a comparable loss in October to those seen over the past 10 years would bring IBM dangerously close to its year-to-date breakeven.

IBM Chart October 6

Options traders have been more bearish than usual in the last two months. This is per the equity's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 88th annual percentile of its annual range. This suggests long puts have been getting picked up at a quicker-than-usual clip. 

For those looking to speculate on the stock's next move lower, premium can be had for a bargain. This is per the stock's Schaeffer's Volatility Index (SVI) of 21%, which sits higher than 26% of readings from the past year. In other words, the options market is pricing in low volatility expectations for the equity at the moment. 

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI