Last month proved to be a pivotal one for the S&P 500 Index (SPX), as "September seasonality" resulted in a monthly losses for the index, which also snapped a seven-month win streak — its longest since 2017. That volatility tends to carry over to October, and while plenty of names usually buck this trend, IBM (NYSE:IBM) has struggled in the past. The Dow member is on Schaeffer's Senior Quantitative Analyst Rocky White's list of 25 worst performing stocks for October, so now seems like a good time to dig into IBM stock's technical setup.
Worst Of October
According White's data, which features SPX stocks with the worst returns in October, IBM averaged a loss of 5.8% over the last 10 years, and finished higher just twice. That puts the security at the very top of the list, solidifying its position as the worst blue-chip component, historically, this month.
At last check, IBM is down 0.5% to trade at $142.43, once again facing pressure from the 100-day moving average. It has been a relatively unremarkable year for the security so far, as its June 10 rally to an annual high of $152.84 is still far off from pre-pandemic levels. Now sporting a 12.4% lead in 2021, a comparable loss in October to those seen over the past 10 years would bring IBM dangerously close to its year-to-date breakeven.
IBM Chart October 6
Options traders have been more bearish than usual in the last two months. This is per the equity's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 88th annual percentile of its annual range. This suggests long puts have been getting picked up at a quicker-than-usual clip.
For those looking to speculate on the stock's next move lower, premium can be had for a bargain. This is per the stock's Schaeffer's Volatility Index (SVI) of 21%, which sits higher than 26% of readings from the past year. In other words, the options market is pricing in low volatility expectations for the equity at the moment.