Morgan Stanley downgraded HPQ to "equal weight" from "overweight"
Morgan Stanley downgraded HP Inc (NYSE:HPQ) to "equal weight" from "overweight" earlier, citing the company's high valuation while noting PC market recovery is already priced into the shares.
HPQ was last seen down 4.2% to trade at $34.41, but still sports a 14.4% year-to-date lead. Pressure could be emerging at the $36 level, which rejected the shares last session after an extended bounce off the $32 level.
Calls have been more popular than usual in the options pits in the past 10 weeks. This is per HP stock's 50-day call/put volume ratio of 3.55 at International Securities Exchange (ISE), Cboe Volatility Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 92% of readings from the past year.
Today's bear note appears to be swaying options traders, though, with 1,925 puts exchanged so far -- five times the intraday average put volume -- compared to just 809 calls. The most active contract is the weekly 8/23 35.50-strike put, where positions are currently being opened.
It’s also worth noting that the equity's Schaeffer's Volatility Scorecard (SVS) ranks at 86 out of 100. This indicates HPQ outperformed volatility expectations in the last 12 months.