Blue-Chip Tech Stock Drags Dow on Revenue Miss

IBM is one of the worst stocks to own in October, historically

Digital Content Manager
Oct 21, 2021 at 10:03 AM
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Blue-chip IBM (NYSE:IBM) is dragging the Dow lower this morning, last seen down 6.4% at $132.79. Though the tech conglomerate posted a third-quarter earnings beat, revenue fell short of analysts' expectations. The company attributed the disappointing results to declines in orders for its infrastructure business.

The brokerage bunch is not responding favorably to the results. The stock already received price-target cuts from Credit Suisse and BMO to $172 and $153, respectively. Overall, analysts are split towards the equity, with five of the nine in question calling it a "hold," while four say "strong buy." 

Earlier this month, IBM appeared on Senior Quantitative Analyst Rocky White's list of worst 25 stocks to own in October. Sure enough, the shares now sport a 4.7% deficit for October, and are trading at their lowest level since mid-April. Longer term, IBM sports a 23.3% year-over-year lead, and today's bear gap so far has support at the stock's 320-day moving average.

The options pits are have seen an influx in put activity. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), IBM's 50-day put/call volume ratio of 0.56 sits higher than 95% of readings from the past year. So while calls still outnumber puts on an absolute basis, the high percentile indicates long puts have been getting picked up at a much quicker-than-usual pace.

Drilling down to today's options activity, 23,000 calls and 14,000 puts have crossed the tape so far, which is 13 time the average intraday amount. Most popular is the weekly 10/22 135-strike call, where new positions are being opened, followed by the January 21, 2022 140-strike call, where LEAPS activity is suspected.


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