IBM Stock Downgraded as 200-Day Looms

Long IBM calls have continued to be popular

Jan 13, 2020 at 10:10 AM
facebook twitter linkedin


IBM Corp (NYSE:IBM) shares are trading lower today, down 0.8% at $135.52, following a downgrade out of Evercore ISI. The brokerage firm dropped its rating to "in line" from "outperform," while reducing its price target to $145 from $160. This stacks up with what most of the Street already thinks of IBM, since the majority of covering analysts already have the equivalent of a "hold" on the shares.

This bearish attention comes as IBM shares are trading right up against their 200-day moving average. This trendline capped the equity's upside on Friday, and also acted as resistance in early November. The $138 region in general could be problematic, as it previously served as a floor for the stock prior to an October bear gap.

Still, call buying has remained popular on the blue chip, based on data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Long calls have roughly doubled long puts across these exchanges in the past 10 days, with the largest increases in open interest during this time frame occurring at the weekly 2/7 150-strike call, along with the February 150 call.

Short interest has continued to climb on IBM, as well. Short interest rose by 8.9% in the last reporting period alone, putting 4.2 days' worth of buying power into these bears' hands, based on average daily trading volumes. If this trend continues, it could represent another headwind for the security.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Master Portfolio Trial
 


 


 
Special Offers from Schaeffer's Trading Partners