Chip behemoth IBM (NYSE:IBM) is sliding 22.6% to trade at $224.88 this morning, after the company posted weaker-than-expected preliminary second-quarter results. IBM expects earnings of $2.93 per share on revenue of $17.2 billion, both of which missed analyst estimates due to weakness in its software and infrastructure businesses as customers shift toward memory chips.
IBM is now deep into the red both year over year and year to date, a far cry from its June 2 record peak of $332.46. Comfortably on the short shale restricted (SSR) list today, IBM stock is pacing for its worst daily drop since Black Monday in 1987, where it fell 23.7%.
Bulls were circling the equity ahead of today. This is per the stock's 10-day call/put volume ratio of 4.52 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 91st percentile of its annual range.
Options traders have been quick to fire this morning too, with 96,000 calls and 92,000 puts across the tape within the first hour of trading. This is already 2.3 times IBM's average daily volume, with the July 200 put and 230 call seeing the most attention.
The equity also sports an Schaeffer's Volatility Scorecards (SVS) reading of 84 out of 100. This suggests the stock has realized higher volatility than its options have priced in over the past 12 months.
