Options Traders Blast Sinking IBM Stock After Earnings

The chip name trimmed its free cash flow forecast for the year

Deputy Editor
Jul 19, 2022 at 2:18 PM
facebook twitter linkedin

The shares of blue chip IBM (NYSE:IBM) are down 6.6% this afternoon at $129.13, after a dire warning overshadowed better-than-expected earnings and revenue for the second quarter. Specifically, the company alerted investors a strong U.S. dollar could result in a $3.5 billion hit from foreign exchange this year, resulting in a cut to its 2022 free cash flow forecast. 

Options traders are taking notice, with 104,000 calls and 87,000 puts exchanged so far today, which is 15 times what is normally seen at this point. The weekly 7/22 130- and 135-strike calls are by far the most popular contracts, with positions being opened at both. 

Analysts are responding to the news as well, with no fewer than four price-target cuts dished out after the announcement. BMO chimed in with the lowest move, dropping its price objective to $148 from $152, while the biggest move came in the form of an $8 cut to $155 from BofA Global Research. Analysts are evenly split on IBM, with five calling it a "buy" or better, while five say "hold" or worse.

On the charts, the 70-day moving average helped keep multiple pullbacks in check over the course of 2022, including one in mid-June when the equity bounced off the trendline as well as the $133 level. IBM stock today slipped below both areas, as well as the long-term 320-day moving average, to trade at its lowest level since May.

IBM Chart July 19


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners