Pre-Earnings Call Buyers Tackle Hewlett-Packard Company (HPQ)

Hewlett-Packard Company (NYSE:HPQ) traders are counting on post-earnings upside

May 21, 2015 at 1:54 PM
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Hewlett-Packard Company (NYSE:HPQ) options are flying off the shelves ahead of the company's fiscal second-quarter earnings report, due out this evening.  At last check, over 82,000 contracts were on the tape, compared to an expected intraday amount of 11,000.

Digging deeper, speculators are gambling on post-earnings upside for HPQ. The June 36 call is the most active strike, and is seeing buy-to-open activity. In other words, these buyers anticipate the shares will topple $36 by the close on Friday, June 19, when front-month options expire.

Taking a step back, short-term traders have tended to be more put-focused on HPQ. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.17 outranks 77% of comparable readings from the past year.

Historically speaking, HPQ tends to move big in the session following earnings. Specifically, looking back eight quarters, the shares have swung 9% in the day after the company's reported -- including a nearly 10% loss in late February.

Today, Hewlett-Packard Company (NYSE:HPQ) is up 2% at $33.72, on the news the firm has sold a controlling stake in its China-based server and storage business to Tsinghua Holdings for more than $2 billion. Nevertheless, HPQ remains 16% lower year-to-date, and is now approaching its 80-day moving average -- which served as support earlier this year, but could reverse roles to act as resistance.

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