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Calls Pop After Rare IBM Bull Note

Patrick Martin

The second-best Dow stock today is IBM Corp (NYSE:IBM), up 2% to trade at $150.63 today. This comes after Morgan Stanley resumed coverage of the tech icon with an "overweight" rating and $170 price target. Plus, the upgrade has triggered unusual activity in IBM's options pits. 

More specifically, IBM has seen almost 45,000 call options change hands today -- double what's typically seen at this point and almost five times the number of puts traded. Most of this action is centered around the September 150 and October 155 calls. One trader likely closed the September 150 call and rolled it out and up to the October call, potentially writing the contract, calling for technical resistance.

This call bias is nothing new for IBM, though. Data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day call/put volume ratio of 2.57 that ranks in the 83rd percentile of its annual range, meaning calls have been bought to open over puts at a quicker-than-usual clip in recent weeks.

IBM stock gapped higher earlier this month after an upbeat quarterly report. Since June, the shares have relied on their ascending 20-day moving average to contain pullbacks, a trendline that served as resistance earlier this year. For a stock that's gained 33% in 2019, there's plenty of room for more bull notes. Of the 16 brokerages covering IBM, 10 rate it a "hold" or "strong sell.".


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