4 Trade Ideas for IBM: Bonus Idea

• Posted by Greg Harmon
• on July 23rd, 2023

Here is your Bonus Idea with links to the full Top Ten:

IBM, $IBM, comes into the week at resistance and building a Cup and Handle pattern. The pattern carries a target to 158.50 on a push over resistance. Price is outside of the Bollinger Bands® which have opened to the upside. The RSI is rising in the bullish zone with the MACD crossed up and positive. There is resistance from 139 to 140 and then at 142.50 and 144.50 then 146 and 147 before 149.50 and 151.50. Support lower comes at 137.25 and 134 then 132 and 129.50. Short interest is moderate at 3%. The stock pays a dividend with an annual yield of 4.78% and has traded ex-dividend since May 9th. The company is expected to report earnings next on October 25th.

The August options chain shows the biggest open interest at the 125 and 115 strikes on the put side and at 130 and 135 on the call side. In the September chain open interest builds from 140 to a peak at 120 then tails to 105 on the put side. The call side is biggest at 140 and 135. The October chain has biggest open interest at the 125 and 120 put strikes with it spread from 130 to 150 on the call side. The November chain is the first to cover the next earnings report and has small open interest spread from 140 to 125 on the put side. The call side sees it focused at 140 and 150.

IBM, Ticker: $IBM

Trade Idea 1: Buy the stock on a move over 140 with a stop at 134.

Trade Idea 2: Buy the stock on a move over 140 and add an August 135/130 Put Spread (84 cents) while selling the October 150 Calls (75 cents).

Trade Idea 3: Buy the August/October 145 Call Calendar ($1.52) while selling the September 130 Put (74 cents).

Trade Idea 4: Buy the October 125/145/150 Call Spread Risk Reversal (37 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the July options expiration in the books, saw equity markets showed some signs of tiring after a promising start to the week.

Elsewhere look for Gold to possibly reverse to the upside out of consolidation while Crude Oil consolidates in the top of a broad range. The US Dollar Index looks to bounce in the downtrend while US Treasuries continue in consolidation. The Shanghai Composite looks to continue the slow drift lower in consolidation while Emerging Markets consolidate in a tightening range.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe both the IWM and QQQ are resetting lower and leading the SPY as they all move back closer to their respective 20 day SMA’s. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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