Hewlett-Packard Company (HPQ) Option Bulls Keep the Faith

Hewlett-Packard Company (HPQ) calls are trading at nearly two times the average intraday pace

Jan 30, 2015 at 2:24 PM
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Hewlett-Packard Company (NYSE:HPQ) is down 3.3% today to linger near $36.51, amid broad-market headwinds. Options traders are keeping the faith, though, with calls crossing the tape at a rate 1.7 times the intraday average, and outpacing puts by a nearly 3-to-1 ratio.

Drilling down, buy-to-open activity has been detected at HPQ's February 39 and March 38 calls, as speculators roll the dice on HPQ to bounce back above the strike prices within the options' respective lifetimes. Delta on the front-month call is docked at 0.15, and 0.37 for the back-month call, indicating a respective 15% and 37% chance the calls will be in the money at expiration.

Widening the sentiment scope reveals options players have been more bearishly biased in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, HPQ's 50-day put/call volume ratio of 0.84 ranks in the 97th annual percentile. In other words, puts have been bought to open over calls with more rapidity just 3% of the time within the past year.

Given HPQ's long-term technical prowess, a portion of the recent put buying may have been a result of shareholders protecting paper profits against any unexpected downside. In fact, not only has Hewlett-Packard Company (NYSE:HPQ) tacked on 36% over the last 52 weeks, but the stock hit a three-year high of $41.10 just three weeks ago.

Weekly Chart of HPQ Since January 2014
 

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