Analyst: IBM Stock a "Place to Hide"

Call volume is running at 3 times what's typically seen this morning

Deputy Editor
Apr 14, 2022 at 10:35 AM
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Morgan Stanley, aside from announcing an earnings beat this morning, on the brokerage side upgraded IBM (NYSE:IBM) to "overweight" from "equal weight," with a price-target hike to $150 from $147. The firm called the stock a "place to hide" amid growing economic risk. IBM is bouncing up 3.3% to trade at $130.26 after the note. 

On the charts, IBM out of the gate tested its 80-day moving average, but has since cooled off from its session highs. Today's gains do have the shares reclaiming their 12-month breakeven level, though. Shorter term, the equity is down 2.5% in 2022.

IBM is gearing up for earnings as well, with its first-quarter report due out after the close on Tuesday, April 19. In the last two years, the stock has averaged a 5% post-earnings swing, regardless of direction. This time around, the options pits are pricing in something similar at 5.1%. Of these eight quarters, five next-day sessions finished positive, including a 5.7% jump this past January. 

The stock is seeing a surge in call volume straight out of the gate this morning. So far, 8,403 calls have crossed the tape -- three times the intraday average -- in comparison to 2,558 puts. The April 130 call is the most popular, expiring at the end of the day today. 

It's also worth noting the equity's Schaeffer's Volatility Scorecard (SVS) sits at 84 out of 100, suggesting IBM has exceeded options traders' volatility expectations over the past year.


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