Is IBM heading for quick rebound?
International Business Machines got slammed in October, but now traders are betting on a quick rebound.
optionMONSTER's Heat Seeker monitoring program detected a flurry of call volume in the tech giant, led by the short-term Weeklies expiring this Friday. Large blocks crossed first in the 162.50s for $0.61 to $0.66, followed a few minutes later by the 165s for $0.15 to $0.54. More than 6,800 contracts traded at the lower strike, while the higher strike saw volume of about 8,000. That was more than triple open interest at both, which indicates new positions were initiated.
Long calls lock in the price where investors can buy a stock, which lets them profit from a rally while risking only a tiny fraction of the share price. The low cost of the options can also produce significant leverage if the shares climb. (See our Education section)
IBM is up 1.44 percent to $163.23 in afternoon trading. It plunged to a three-year low last month after missing estimates and warning of a "marked slowdown in September." Today there were also rumors that activist investor Carl Icahn may target the company.
Total option volume in IBM is triple the daily average, with calls outnumbering puts by about 4 to 1.
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