) -- Shares of
are relatively unchanged Friday, but options volume during afternoon trading suggests one investor expects significant upside in the stock throughout the later term.
HPQ did not announce any news today. The stock is up roughly 10 cents to $53.73. However, the stock is trading right around its 52-week high of $53.97, and call buying action suggests an investor expects the stock to reach new highs sometime during the next seven months.
At 3:17 p.m. EST, a block of more than 45,000 November 70 calls changed hands for the ask price of 25 cents per contract versus current open interest of zero contracts, indicating bullish investors bought these options to open.
This long call trade bets on the stock to rally at least 29% throughout the later-term, and for HPQ shares to climb higher than $70.25 prior to November options expiration. Keep in mind that HPQ shares have not reached $70 the past five years, and average daily options volume is roughly 30,000 contracts. This single trade trumped normal options volume and calls for the stock to trade at a new high.
The November 70 calls have gained three cents so far on the day and have an implied volatility of 20% compared to the stock's 30-day historical volatility of just 10% (the buying action pushed up the price of the calls and their implied volatility on the day).
HPQ has not announced its next earnings release date, but the market anticipates the report around May 18.
-- Written by Judd Pyle
At the time of publication, Pyle did not have a position in the stock mentioned.
Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."