Option Bulls Jump On IBM

International Business Machines Corp. (IBM) CEO Ginni Rometty pledged to grow new businesses

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Published on Feb 26, 2015 at 10:57 AM
Updated on Apr 20, 2015 at 5:32 PM

Calls have been the options of choice in International Business Machines Corp.'s (NYSE:IBM) options pits lately. The stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.91 indicates calls have been bought to open at nearly twice the rate of puts during the last two weeks. What's more, the ratio ranks in the bullishly skewed 90th percentile of its annual range.

IBM calls are again in high demand this morning, with the contracts crossing at 1.4 times the expected intraday rate. Traders are apparently buying to open the security's out-of-the-money March 165 call, in the hopes IBM will topple the strike by the close on Friday, March 20 -- when the front-month options expire.

This morning, the tech stock is sitting 0.2% higher at $163.06, after International Business Machines Corp. (NYSE:IBM) CEO Ginni Rometty committed to spending $4 billion to grow revenue from new businesses over the next few years. Longer term, however, the shares have struggled -- falling 12% on a year-over-year basis. Should this downtrend resume, a capitulation among option bulls could result in headwinds.

Daily Chart of IBM since February 2014


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