HP Stock Heads for 5th-Straight Loss After Downgrade

Options traders have been overwhelmingly bullish

Deputy Editor
Jul 5, 2022 at 3:33 PM
facebook twitter linkedin


The shares of HP Inc (NYSE:HPQ) are being pushed lower by a downgrade from Evercore ISI to "in line" from "outperform," with a price-target cut to $36 from $43. The firm is concerned by the potential for "more severe" PC headwinds. Today's adjustment has Evercore joining the bearish majority, with 16 of the 18 analysts in coverage now carrying a "hold" or worse rating. HPQ is down 2.7% to trade at $31.01 at last glance. 

Former support at the 180-day moving average rejected the shares near the end of June, and HPQ has been careening lower since -- on track for its fifth-straight daily loss. Now trading at its lowest levels since November 2021, HP stock is down 17.6% year-to-date.

It's worth noting, however, that HPQ's relative strength index (RSI) of 31.8 sits on the cusp of "oversold" territory. This means the tech stock could be due for a short-term bounce. 

HPQ July5

Options traders appear to be betting on the stock's next leg higher. In the past two weeks, 6.10 calls have been bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 98% of readings from the past year, showing calls being picked up at a much faster-than-usual rate. During this time, the August 40 call was the most popular, followed by the July 35.50 call. 

Meanwhile, short interest represents 5.7% of the stock's available float, or over four days' worth of pent-up buying power. 

 

  

These investors are using the market's volatility to their advantage and scoring triple-digit gains on many of their trades.

Even in today's sideways bear market, this trading strategy has continued to provide consistency and profitability to a small group of investors. By using this approach, these traders are removing directional risk and still hitting triple-digit returns. If you want access to this strategy, and lower risk with higher returns sounds good to you, then don't wait another minute.

Join us now to receive our next trades the moment they come out!

 

Common mistakes options traders make
 


 


 
Special Offers from Schaeffer's Trading Partners