That could explain why traders are pouring into options on IBM after news the Armonk, New York-based juggernaut stands to receive $1 billion from the U.S. Commerce Department, the biggest recipient of a series of grants to support quantum computing.
Options traders stormed into the stock, trading almost 200,000 contracts, on pace for 15 times the daily average of the past 30 days, according to data from Cboe’s LiveVol. Calls outpaced puts nearly 8:1. More than 42,000 calls were bought, compared to 27,500 sold and less than 4,000 puts bought.
It’s not hard to see the similarities in the story of the government’s endorsement of IBM as its investment in sidelined semiconductor giant Intel, whose shares were in a multiyear, 70% decline before turning around last year as the government took a 10% stake in the stock. Intel’s up 500% since its low last year, rewarding options traders who took outsized bets on a rally.
IBM 5yr chart
The biggest options trader in the stock Thursday seems to believe this deal could be the catalyst for a multi-year run. They spent $2.7 million buying more than 500 contracts of the 260-strike call expiring Dec. 15, 2028.
That’s the longest-dated contract available to trade in the stock and carries a juicy time premium that means the trader actually needs IBM to get across $312 by expiry, or roughly 30% higher from here.
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