Blue-Chip Tech Name Reels In Bull Notes After Earnings Beat

An unwinding of pessimism in the options pits could send the equity higher

Digital Content Manager
Jul 20, 2021 at 10:15 AM
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Blue-chip tech name IBM (NYSE:IBM) is up 3% to trade at $142.05 at last check, after the company reported better-than-expected second-quarter earnings of $2.33 per share, as opposed to the $2.29 per share analysts anticipated. The recovery of client spending powered growth in its cloud and consulting businesses, with sales of the former jumping 13% to $7 billion.

The brokerage bunch is responding to the IBM news with optimism. IBM stock earned four price-target hikes this morning, including one from Credit Suisse to $167. Analysts are split on IBM stock. Of the eight in coverage, four said "strong buy,"  while the remaining four called the security a "hold." Meanwhile, the 12-month consensus price target of $148.18 is a 7.4% premium to its current perch.

Digging deeper, IBM stock pivoted higher in early March to hit a June 10, annual high of $152.82. And while the shares recently dipped below the 80-day moving average, IBM stock bounced off the $136 mark to reconquer that trendline today, and is now eyeing its best day in nine months.

A sentiment shift in the options pits could fuel additional tailwinds for IBM stock. This is per IBM stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands in the 80th percentile of its annual range. This suggests puts are being picked up at a faster-than-usual rate. 

Drilling down to today's options activity, 17,000 calls and 16,00 puts have crossed the tape, which is seven times the intraday average. Most popular is the 7/23 125-strike put, followed by the 145-strike call in the same series, both of which expire at the end of the week.


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